Sherrod, Inc., reported a pretax accounting income of $68 million for 2016. The following information relates to the differences between pretax accounting income and taxable income: a. Income from installment sales of properties included in pretax accounting income in 2016 exceeded that reported for tax purposes by $6 million. The installment receivable account at year-end had a balance of $8 million (representing portions of 2015 and 2016 installment sales), expected to be collected equally in 2017 and 2018. b. Sherrod was assessed a penalty of $4 million by the Environmental Protection Agency for violation of federal law in 2016. The fine is to be paid in equal amounts in 2016 and 2017. c. Sherrod rents its operating facilities but owns one asset acquired in 2015 at a cost of $56 million. Depreciation is reported by the straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation in the first two years but less than straight-line depreciation in the next two years ($ in millions). What is the 2016 net income? (General Account)
Sherrod, Inc., reported a pretax accounting income of $68 million for 2016. The following information relates to the differences between pretax accounting income and taxable income: a. Income from installment sales of properties included in pretax accounting income in 2016 exceeded that reported for tax purposes by $6 million. The installment receivable account at year-end had a balance of $8 million (representing portions of 2015 and 2016 installment sales), expected to be collected equally in 2017 and 2018. b. Sherrod was assessed a penalty of $4 million by the Environmental Protection Agency for violation of federal law in 2016. The fine is to be paid in equal amounts in 2016 and 2017. c. Sherrod rents its operating facilities but owns one asset acquired in 2015 at a cost of $56 million. Depreciation is reported by the straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation in the first two years but less than straight-line depreciation in the next two years ($ in millions). What is the 2016 net income? (General Account)
Chapter12: Tax Credits And Payments
Section: Chapter Questions
Problem 23P
Related questions
Question
What is the 2016 net income?
Transcribed Image Text:Sherrod, Inc., reported a pretax accounting income of
$68 million for 2016. The following information
relates to the differences between pretax accounting
income and taxable income:
a. Income from installment sales of properties
included in pretax accounting income in 2016
exceeded that reported for tax purposes by $6 million.
The installment receivable account at year-end had a
balance of $8 million (representing portions of 2015
and 2016 installment sales), expected to be collected
equally in 2017 and 2018.
b. Sherrod was assessed a penalty of $4 million by the
Environmental Protection Agency for violation of
federal law in 2016. The fine is to be paid in equal
amounts in 2016 and 2017.
c. Sherrod rents its operating facilities but owns one
asset acquired in 2015 at a cost of $56 million.
Depreciation is reported by the straight-line method
assuming a four-year useful life. On the tax return,
deductions for depreciation will be more than
straight-line depreciation in the first two years but
less than straight-line depreciation in the next two
years ($ in millions).
What is the 2016 net income? (General Account)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you