Question: On January 1 the company purchased investment securities for 1 000 The
On January 1, the company purchased investment securities for $1,000. The securities are classified as trading. By December 31, the securities had a fair value of $2,300 but had not yet been sold. The company also recognized a $3,000 restructuring charge during the year. The restructuring charge is composed of an impairment write-down on a manufacturing facility. Tax rules do not allow a deduction for the write-down unless the facility is actually sold; the facility was not sold by the end of the year. Excluding the trading securities and the restructuring charge, income before taxes for the year was $10,000. Assume that there are no other book-tax differences. The income tax rate is 35% for the current year and all future years. Prepare the journal entry or entries necessary to record income tax expense for the year. State any assumptions you must make.
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