Answer :
Answer:
17.68%
Explanation:
Given:
Pretax book income = $1,032,000
Net reserve for warranties = $101,600
Additional Tax depreciation = $208,000
Deduction of dividends received = $56,400
Now,
Taxable income
= Pretax book income + Net reserve for warranties - Additional Tax depreciation - Deduction of dividends received
= $1,032,000 + $101,600 - $208,000 - $56,400
= $1,133,600 - $264,400
= $869,200
Now,
The amount of Tax at the rate 21%
= Taxable income × Tax rate
= $869,200 × 21%
= $182,532
Therefore,
The Effective accounting tax rate
= [tex]\frac{\textup{Total tax}}{\textup{Pretax income}}[/tex]
= [tex]\frac{\$\textup{182,532}}{\$\textup{1,032,000}}[/tex]
= 0.1768
or
= 0.1768 × 100%
= 17.68%