On January 1, the company purchased investment securities for $2,000. The securities are classified as trading. By
Question:
On January 1, the company purchased investment securities for $2,000. The securities are classified as trading. By December 31, the securities had a fair value of $4,200 but had not yet been sold. The company also recognized a $7,000 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 $25,000. Assume that there are no other book-tax differences. The income tax rate is 40% 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.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen