The following events occurred for Scythian, Inc. between its December 31, 2022 year-end and the issuance of its financial statements on February 28, 2023: Event 1: The company settled a disagreement with the Internal Revenue Service regarding income taxes payable for 2021. Scythian had accrued income taxes payable of $3,000,000. The settlement requires payment of $3,200,000. Event 2: The company’s 3rd largest customer abruptly declared bankruptcy because of the CEO’s embezzlement of company funds. At year-end, the customer owed Scythian $1,200,000 but had made a payment of $400,000 in January 2023. Event 3: Employees at one of the company’s largest plants went on strike in January 2023. The strike is expected to cost the company between $500,000 and $1,000,000 in lost revenue. What is the net effect of these events on 2022 net income?
The following events occurred for Scythian, Inc. between its December 31, 2022 year-end and the issuance of its financial statements on February 28, 2023: Event 1: The company settled a disagreement with the Internal Revenue Service regarding income taxes payable for 2021. Scythian had accrued income taxes payable of $3,000,000. The settlement requires payment of $3,200,000. Event 2: The company’s 3rd largest customer abruptly declared bankruptcy because of the CEO’s embezzlement of company funds. At year-end, the customer owed Scythian $1,200,000 but had made a payment of $400,000 in January 2023. Event 3: Employees at one of the company’s largest plants went on strike in January 2023. The strike is expected to cost the company between $500,000 and $1,000,000 in lost revenue. What is the net effect of these events on 2022 net income?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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The following events occurred for Scythian, Inc. between its December 31, 2022 year-end and the issuance of its financial statements on February 28, 2023:
Event 1: The company settled a disagreement with the Internal Revenue Service regarding income taxes payable for 2021. Scythian had accrued income taxes payable of $3,000,000. The settlement requires payment of $3,200,000.
Event 2: The company’s 3rd largest customer abruptly declared bankruptcy because of the CEO’s embezzlement of company funds. At year-end, the customer owed Scythian $1,200,000 but had made a payment of $400,000 in January 2023.
Event 3: Employees at one of the company’s largest plants went on strike in January 2023. The strike is expected to cost the company between $500,000 and $1,000,000 in lost revenue.
What is the net effect of these events on 2022 net income?
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