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Required: Compute SEP's taxable income. Note: Amounts to be deducted shoul

Required: Compute SEP's taxable income. Note: Amounts to be deducted shoul

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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SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: . SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. . SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. . SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. Answer is complete but not entirely correct. SEP's net book income before tax Adjustments: Research costs Depreciation Amortization S Amount 918,000 4,412 X (21,778) 153 X < Prev 9 of 20 300 --- D Next >
Transcribed Image Text:SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: . SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. . SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. . SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. Answer is complete but not entirely correct. SEP's net book income before tax Adjustments: Research costs Depreciation Amortization S Amount 918,000 4,412 X (21,778) 153 X < Prev 9 of 20 300 --- D Next >
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