Corriveau Industries Decided to Switch from an Accelerated Depreciation Method

Essay

Corriveau Industries decided to switch from an accelerated depreciation method to a straight-line method in the second quarter of 20X1. This is classified as a cumulative effect of a change in accounting principle. The first-quarter, pretax income reported was $30,000, and projected pretax income for 20X1 was $90,000. If Corriveau had used straight-line depreciation for the quarter, pretax income would have been $35,000 and projected pretax income for 20X1 would have been $110,000. The cumulative effect on prior years from the change is a $50,000 increase in retained earnings. The second-quarter income using straight-line depreciation is $20,000, and the expected annual earnings continue to be $110,000. Assume that Corriveau is subject to a flat 25% statutory tax rate for 20X1. Corriveau is expecting $5,000 of tax-free income during the third and fourth quarters of 20X1.
Required:
For all categories of income, calculate the interim tax expense for the first quarter, first quarter restated, and second quarter.