Question: The following information has been obtained for the Gocker Corpo

The following information has been obtained for the Gocker Corporation.
1. Prior to 2012, taxable income and pretax financial income were identical.
2. Pretax financial income is $1,700,000 in 2012 and $1,400,000 in 2013.
3. On January 1, 2012, 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.
4. Interest of $60,000 was earned on tax-exempt municipal obligations in 2013.
5. Included in 2013 pretax financial income is an extraordinary gain of $200,000, which is fully taxable.
6. The tax rate is 35% for all periods.
7. Taxable income is expected in all future years.

(a) Compute taxable income and income tax payable for 2013.
(b) Prepare the journal entry to record 2013 income tax expense, income tax payable, and deferred taxes. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
(c) Prepare the bottom portion of Gocker's 2013 income statement, beginning with “Income before income taxes and extraordinary item.”
(d) Indicate how deferred income taxes should be presented on the December 31, 2013, balance sheet.

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  • CreatedJuly 26, 2013
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