TGW, a calendar year corporation, reported $3,992,000 net income before tax on its financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information: TGW’s depreciation expense per books was $455,000, and its MACRS depreciation deduction was $381,400. TGW capitalized $685,000 indirect expenses to manufactured inventory for book purposes and $816,000 indirect expenses to manufactured inventory for tax purposes. TGW’s cost of manufactured goods sold was $2,564,000 for book purposes and $2,652,000 for tax purposes. Four years ago, TGW capitalized $2,292,000 goodwill when it purchased a competitor’s business. This year, TGW’s auditors required the corporation to write the goodwill down to $1,535,000 and record a $757,000 goodwill impairment expense. Required: Part A Compute TGW’s taxable income. Note: Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.
TGW, a calendar year corporation, reported $3,992,000 net income before tax on its financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information: TGW’s depreciation expense per books was $455,000, and its MACRS depreciation deduction was $381,400. TGW capitalized $685,000 indirect expenses to manufactured inventory for book purposes and $816,000 indirect expenses to manufactured inventory for tax purposes. TGW’s cost of manufactured goods sold was $2,564,000 for book purposes and $2,652,000 for tax purposes. Four years ago, TGW capitalized $2,292,000 goodwill when it purchased a competitor’s business. This year, TGW’s auditors required the corporation to write the goodwill down to $1,535,000 and record a $757,000 goodwill impairment expense. Required: Part A Compute TGW’s taxable income. Note: Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 5BCRQ
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Question
TGW, a calendar year corporation, reported $3,992,000 net income before tax on its financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information:
- TGW’s
depreciation expense per books was $455,000, and its MACRS depreciation deduction was $381,400. - TGW capitalized $685,000 indirect expenses to manufactured inventory for book purposes and $816,000 indirect expenses to manufactured inventory for tax purposes.
- TGW’s cost of manufactured goods sold was $2,564,000 for book purposes and $2,652,000 for tax purposes.
- Four years ago, TGW capitalized $2,292,000
goodwill when it purchased a competitor’s business. This year, TGW’s auditors required the corporation to write the goodwill down to $1,535,000 and record a $757,000 goodwill impairment expense.
Required: Part A
Compute TGW’s taxable income.
Note: Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.
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