Question

At the end of Year 6, South Co.'s tax department estimates that they will have future taxable income of $288,000 due to installment sales and $90,000 due to depreciation differences. They also estimates that they will have future deducations of $300,000 during to unearned rent. Assuming that its pre-tax accounting income for the year ended December 31, Year 6 is $345,000, compute Year 6 taxable income for South Co.

Answer 1

$267,000

Step-by-step explanation:

For the year 6, the taxable income for South Co is:

= Pre-tax income - installment sales - depreciation + unearned rent

= $345,000 - $288,000 – $90,000 + $300,000 = $267,000