Unicorn Development began operations in December 2024. When property is sold on an installment basis, Unicorn recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2024 installment income was $150,000 and will be collected over the next three years: 2025, $70,000; 2026, $50,000; 2027, $30,000. Unicorn also had product warranty costs of $35,000 expensed for financial reporting purposes in 2024. For tax purposes, only the $5,000 of warranty costs actually paid in 2024 was deducted. The remaining $30,000 will be deducted for tax purposes when paid over the next three years as follows: 2025, $18,000; 2026, $8,000; 2027, $4,000. Pretax accounting income for 2024 was $840,000, which includes interest revenue of $20,000 from municipal governmental bonds. The enacted tax rate is 20% for year 2024 and 25% for years 2025-2027. The amount of Unicorn's 2024 net income would be: O $670,000 $615,000 $656,000 $672,000
Unicorn Development began operations in December 2024. When property is sold on an installment basis, Unicorn recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2024 installment income was $150,000 and will be collected over the next three years: 2025, $70,000; 2026, $50,000; 2027, $30,000. Unicorn also had product warranty costs of $35,000 expensed for financial reporting purposes in 2024. For tax purposes, only the $5,000 of warranty costs actually paid in 2024 was deducted. The remaining $30,000 will be deducted for tax purposes when paid over the next three years as follows: 2025, $18,000; 2026, $8,000; 2027, $4,000. Pretax accounting income for 2024 was $840,000, which includes interest revenue of $20,000 from municipal governmental bonds. The enacted tax rate is 20% for year 2024 and 25% for years 2025-2027. The amount of Unicorn's 2024 net income would be: O $670,000 $615,000 $656,000 $672,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Unicorn Development began operations in December 2024. When property is sold on an installment basis, Unicorn
recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment
income is reported by the installment method. 2024 installment income was $150,000 and will be collected over the
next three years: 2025, $70,000; 2026, $50,000; 2027, $30,000.
Unicorn also had product warranty costs of $35,000 expensed for financial reporting purposes in 2024. For tax
purposes, only the $5,000 of warranty costs actually paid in 2024 was deducted. The remaining $30,000 will be
deducted for tax purposes when paid over the next three years as follows: 2025, $18,000; 2026, $8,000; 2027,
$4,000.
Pretax accounting income for 2024 was $840,000, which includes interest revenue of $20,000 from municipal
governmental bonds. The enacted tax rate is 20% for year 2024 and 25% for years 2025-2027.
The amount of Unicorn's 2024 net income would be:
O $670,000
$615,000
$656,000
$672,000
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