TGW, a calendar year corporation, reported $4,124,000 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 $466,000, and its MACRS depreciation deduction was $386,900. TGW capitalized $696,000 indirect expenses to manufactured inventory for book purposes and $838,000 indirect expenses to manufactured inventory for tax purposes. • TGW's cost of manufactured goods sold was $2,575,000 for book purposes and $2,674,000 for tax purposes. • Four years ago, TGW capitalized $2,358,000 goodwill when it purchased a competitor's business. This year, TGW's auditors required the corporation to write the goodwill down to $1,590,000 and record a $768,000 goodwill impairment expense. Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) 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 $4,124,000 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 $466,000, and its MACRS depreciation deduction was $386,900. TGW capitalized $696,000 indirect expenses to manufactured inventory for book purposes and $838,000 indirect expenses to manufactured inventory for tax purposes. • TGW's cost of manufactured goods sold was $2,575,000 for book purposes and $2,674,000 for tax purposes. • Four years ago, TGW capitalized $2,358,000 goodwill when it purchased a competitor's business. This year, TGW's auditors required the corporation to write the goodwill down to $1,590,000 and record a $768,000 goodwill impairment expense. Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A28
Transcribed Image Text:TGW, a calendar year corporation, reported $4,124,000 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 $466,000, and its MACRS depreciation deduction was $386,900.
• TGW capitalized $696,000 indirect expenses to manufactured inventory for book purposes and $838,000 indirect
expenses to manufactured inventory for tax purposes.
• TGW's cost of manufactured goods sold was $2,575,000 for book purposes and $2,674,000 for tax purposes.
• Four years ago, TGW capitalized $2,358,000 goodwill when it purchased a competitor's business. This year, TGW's auditors
required the corporation to write the goodwill down to $1,590,000 and record a $768,000 goodwill impairment expense.
Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated
with a minus sign.)
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
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