The following information has been obtained for the Gocker Corporation. 1. Prior to 2014, taxable income and
Question:
The following information has been obtained for the Gocker Corporation. 1. Prior to 2014, taxable income and pretax financial income were identical. 2. Pretax financial income is $1,742,700 in 2014 and $1,406,400 in 2015. 3. On January 1, 2014, equipment costing $1,240,000 is purchased. It is to be depreciated on a straightline 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 $68,700 was earned on tax-exempt municipal obligations in 2015. 5. Included in 2015 pretax financial income is an extraordinary gain of $204,600, which is fully taxable. 6. The tax rate is 37% for all periods. 7. Taxable income is expected in all future years. Prepare the journal entry to record 2015 income tax expense, income taxes payable, and deferred taxes. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Prepare the bottom portion of Gocker’s 2015 income statement, beginning with “Income before income taxes and extraordinary item.” (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield