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Compute taxable income and income taxes payable for 2026.

Compute taxable income and income taxes payable for 2026.

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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The following information has been obtained for Cullumber Corporation. 1. Prior to 2025, taxable income and pretax financial income were identical. 2. Pretax financial income is $1,869,000 in 2025 and $1,345,000 in 2026. 3. On January 1, 2025, equipment costing $1,172,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 10A.) 4. Interest of $59,000 was earned on tax-exempt municipal obligations in 2026. 5. Included in 2026 pretax financial income is a gain on discontinued operations of $191,000, which is fully taxable. 6. The tax rate is 20% for all periods. 7. Taxable income is expected in all future years. (a) Compute taxable income and income taxes payable for 2026. Taxable income $ Income taxes payable
Transcribed Image Text:The following information has been obtained for Cullumber Corporation. 1. Prior to 2025, taxable income and pretax financial income were identical. 2. Pretax financial income is $1,869,000 in 2025 and $1,345,000 in 2026. 3. On January 1, 2025, equipment costing $1,172,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 10A.) 4. Interest of $59,000 was earned on tax-exempt municipal obligations in 2026. 5. Included in 2026 pretax financial income is a gain on discontinued operations of $191,000, which is fully taxable. 6. The tax rate is 20% for all periods. 7. Taxable income is expected in all future years. (a) Compute taxable income and income taxes payable for 2026. Taxable income $ Income taxes payable
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