Cullumber Corp. sold an investment on an installment basis. The total gain of $63,600 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one- third of the sale price is collected in the period of sale. The tax rate was 40% in 2025, and 20% in 2026 and 2027. The 20% tax rate was not enacted in law until 2026. The accounting and tax data for the 3 years is shown below. 2025 (40% tax rate) Income before temporary difference Temporary difference Income Financial Accounting Tax Return $74,200 $74,200 63,600 21,200 $137,800 $95,400 2026 (20% tax rate) Income before temporary difference $74,200 $74,200 Temporary difference 0 21.200

Cullumber Corp. sold an investment on an installment basis. The total gain of $63,600 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one- third of the sale price is collected in the period of sale. The tax rate was 40% in 2025, and 20% in 2026 and 2027. The 20% tax rate was not enacted in law until 2026. The accounting and tax data for the 3 years is shown below. 2025 (40% tax rate) Income before temporary difference Temporary difference Income Financial Accounting Tax Return $74,200 $74,200 63,600 21,200 $137,800 $95,400 2026 (20% tax rate) Income before temporary difference $74,200 $74,200 Temporary difference 0 21.200

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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