Problems with APB#11
APB #11: Refer back to our example, John’s Pajama’s:
Suppose it is now year 2. The following facts are true:
Book income, year 2 $30,000
No new differences have arisen.
Prior differences reverse as planned.
Congress changes the tax rate to 30%
Book income $30,000
+ depreciation expense 2,250
- vacation expense (300)
Taxable income $31,950