Gator Incorporated reported taxable income of $1,150,000 this year and paid federal income taxes of $381,000. Included in the company's computation of taxable income is a $67,500 gain from the sale of a depreciable asset with an income tax basis of $135,000. The income tax basis of the asset was $135,000. The E&P basis of the asset using the alternative depreciation system was $234,500. Compute the company's current E&P. Note: Negative amount should be indicated with a minus sign. Taxable income Federal income taxes Regular tax gain from sale of asset E&P loss from sale of asset Current E&P $ 1,150,000 (32,000) $ 1,118,000

Gator Incorporated reported taxable income of $1,150,000 this year and paid federal income taxes of $381,000. Included in the company's computation of taxable income is a $67,500 gain from the sale of a depreciable asset with an income tax basis of $135,000. The income tax basis of the asset was $135,000. The E&P basis of the asset using the alternative depreciation system was $234,500. Compute the company's current E&P. Note: Negative amount should be indicated with a minus sign. Taxable income Federal income taxes Regular tax gain from sale of asset E&P loss from sale of asset Current E&P $ 1,150,000 (32,000) $ 1,118,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 5MC: At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial...

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At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?
Assume the same information as in RE11-3, except that Albany Corporation purchased the asset on April 1, Year 1. Calculate the depreciation for Year 1 and Year 2 using the double-declining-balance method. Round to the nearest dollar.
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