The following information has been obtained for Tamarisk Corporation.1. Prior to 2020, taxable income and pretax financial income were identical.2. Pretax financial income is $1,575,000 in 2020 and $1,425,000 in 2021.3. On January 1, 2020, equipment costing $1,200,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.)4. Interest of $54,000 was earned on tax-exempt municipal obligations in 2021.5. Included in 2021 pretax financial income is a gain on discontinued operations of $183,000, which is fully taxable.6. The tax rate is 20% for all periods.7. Taxable income is expected in all future years. **Tamarisk Corporation: Income Statement Preparation**The image displays a template for preparing the bottom portion of Tamarisk Corporation's 2021 income statement, specifically starting with "Income from Continuing Operations before Income Taxes."### Instructions:- **Title:** Tamarisk Corporation Income Statement (Partial)- **Subtitle:** For the Year Ended December 31, 2021 (with a dropdown menu for selecting the date)### Sections to be Filled In:1. **Income from Continuing Operations before Income Taxes:** - Input box for the amount in dollars ($).2. **Applicable Income Tax:** - Labeled section to indicate the income tax applied to continuing operations. - Input box for the amount in dollars ($).3. **Additional Fields:** - Several labeled sections below the income and tax lines. These sections may include fields for items such as: - Extraordinary items (net of tax) - Discontinued operations (net of tax) - Cumulative effects of changes in accounting principles (net of tax) - Each field has an input box for entering amounts in dollars ($).The template also includes options for entering negative amounts using either a negative sign (e.g., -45) or parentheses (e.g., (45)) to denote losses or deductions.### Visual Layout:- Fields are demarcated clearly with lines to separate each category.- Labels align adjacent to the respective input boxes for clarity and structured data entry.- Logical and orderly arrangement ensuring a systematic approach to completing the income statement.This template is designed to assist in organizing and calculating key components of an income statement, providing a clear method for financial reporting and analysis for the year ending December 31, 2021.

The bottom income statement starts with income before tax and it is adjusted by some additional…

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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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The following information has been obtained for Tamarisk Corporation.

1.		Prior to 2020, taxable income and pretax financial income were identical.
2.		Pretax financial income is $1,575,000 in 2020 and $1,425,000 in 2021.
3.		On January 1, 2020, equipment costing $1,200,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.)
4.		Interest of $54,000 was earned on tax-exempt municipal obligations in 2021.
5.		Included in 2021 pretax financial income is a gain on discontinued operations of $183,000, which is fully taxable.
6.		The tax rate is 20% for all periods.
7.		Taxable income is expected in all future years.

**Tamarisk Corporation: Income Statement Preparation**

The image displays a template for preparing the bottom portion of Tamarisk Corporation's 2021 income statement, specifically starting with "Income from Continuing Operations before Income Taxes."

### Instructions:
- **Title:** Tamarisk Corporation Income Statement (Partial)
- **Subtitle:** For the Year Ended December 31, 2021 (with a dropdown menu for selecting the date)

### Sections to be Filled In:
1. **Income from Continuing Operations before Income Taxes:**
- Input box for the amount in dollars ($).

2. **Applicable Income Tax:**
- Labeled section to indicate the income tax applied to continuing operations.
- Input box for the amount in dollars ($).

3. **Additional Fields:**
- Several labeled sections below the income and tax lines. These sections may include fields for items such as:
- Extraordinary items (net of tax)
- Discontinued operations (net of tax)
- Cumulative effects of changes in accounting principles (net of tax)
- Each field has an input box for entering amounts in dollars ($).

The template also includes options for entering negative amounts using either a negative sign (e.g., -45) or parentheses (e.g., (45)) to denote losses or deductions.

### Visual Layout:
- Fields are demarcated clearly with lines to separate each category.
- Labels align adjacent to the respective input boxes for clarity and structured data entry.
- Logical and orderly arrangement ensuring a systematic approach to completing the income statement.

This template is designed to assist in organizing and calculating key components of an income statement, providing a clear method for financial reporting and analysis for the year ending December 31, 2021.

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