TGW, a calendar year corporation, reported $4,016,000 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 $457,000, and its MACRS depreciation deduction was $382,400. • TGW capitalized $687,000 indirect expenses to manufactured inventory for book purposes and $820,000 indirect expenses to manufactured inventory for tax purposes. • TGW's cost of manufactured goods sold was $2,566,000 for book purposes and $2,656,000 for tax purposes. • Four years ago, TGW capitalized $2,304,000 goodwill when it purchased a competitor's business. This year, TGW's auditors required the corporation to write the goodwill down to $1,545,000 and record a $759,000 goodwill impairment expense. Required: Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) Amount TGW's net book income before tax Adjustments: Depreciation Indirect inventory costs Cost of goods sold Book goodwill impairment expense Tax amortization of goodwill TGW's taxable income

TGW, a calendar year corporation, reported $4,016,000 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 $457,000, and its MACRS depreciation deduction was $382,400. • TGW capitalized $687,000 indirect expenses to manufactured inventory for book purposes and $820,000 indirect expenses to manufactured inventory for tax purposes. • TGW's cost of manufactured goods sold was $2,566,000 for book purposes and $2,656,000 for tax purposes. • Four years ago, TGW capitalized $2,304,000 goodwill when it purchased a competitor's business. This year, TGW's auditors required the corporation to write the goodwill down to $1,545,000 and record a $759,000 goodwill impairment expense. Required: Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) Amount TGW's net book income before tax Adjustments: Depreciation Indirect inventory costs Cost of goods sold Book goodwill impairment expense Tax amortization of goodwill TGW's taxable income

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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