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Compute Bali's taxable income. how did they get these answers ($23,000) and $38,000 Bali's net book income before taxes $605800 Excess of book over tax depreciation 25600 Book gain on equipment sale $(23000) Tax gain on equipment sale 38000 15000 non deductible loss on sale to related party 23550 Bali's taxable income $669950

Compute Bali's taxable income. how did they get these answers ($23,000) and $38,000 Bali's net book income before taxes $605800 Excess of book over tax depreciation 25600 Book gain on equipment sale $(23000) Tax gain on equipment sale 38000 15000 non deductible loss on sale to related party 23550 Bali's taxable income $669950

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bali Inc. reported $605,800 net income before tax on this year's financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: Depreciation expense per books was $53,000, and MACRS depreciation was $27,400. Bali sold business equipment for $100,000 cash. The original cost of the equipment was $125,000. Book accumulated depreciation through date of sale was $48,000, and MACRS accumulated depreciation through date of sale was $63,000. Bali sold investment land to Coroda, a corporation owned by the same person that owns Bali. The amount realized on sale was $115,000, and Bali's basis in the land was $40,000. Bali sold marketable securities to its sole shareholder. The amount realized on sale was $51,450, and Bali's basis in the securities was $75,000. Compute Bali's taxable income. how did they get these answers ($23,000) and $38,000 Bali's net book income before taxes $605800 Excess of book over tax depreciation 25600 Book gain on equipment sale $(23000) Tax gain on equipment sale 38000 15000 non deductible loss on sale to related party 23550 Bali's taxable income $669950
Transcribed Image Text:Bali Inc. reported $605,800 net income before tax on this year's financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: Depreciation expense per books was $53,000, and MACRS depreciation was $27,400. Bali sold business equipment for $100,000 cash. The original cost of the equipment was $125,000. Book accumulated depreciation through date of sale was $48,000, and MACRS accumulated depreciation through date of sale was $63,000. Bali sold investment land to Coroda, a corporation owned by the same person that owns Bali. The amount realized on sale was $115,000, and Bali's basis in the land was $40,000. Bali sold marketable securities to its sole shareholder. The amount realized on sale was $51,450, and Bali's basis in the securities was $75,000. Compute Bali's taxable income. how did they get these answers ($23,000) and $38,000 Bali's net book income before taxes $605800 Excess of book over tax depreciation 25600 Book gain on equipment sale $(23000) Tax gain on equipment sale 38000 15000 non deductible loss on sale to related party 23550 Bali's taxable income $669950
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