Question

Based on the following information, compute 2018 taxable income for South Co. assuming that its pre-tax accounting income for the year ended December 31, 2018 is $460,000. Future taxable Temporary difference (deductible) amount Installment sales $384,000 Depreciation $120,000 Unearned rent ($400,000)

Answer 1

South Co. taxable income = $356,000

Step-by-step explanation:

Given Data:

Installment sales = $384,000

Depreciation = $120,000

Unearned rent = $400,000

Pre-tax accounting income = $460,000

South Co. taxable income is calculated using the formula;

South Co. taxable income = Pre-tax accounting income+ Unearned rent -

Installment sales - Depreciation

= $460,000 + $400,000 -$384,000- $120,000

= $356,000

Answer 2

TAXABLE INCOME $356,000

Step-by-step explanation:

pre tax accounting income = $460,000

Installment sales = - $384,000

Depreciation = - $120,000

Unearned rent = ($400,000)

TAXABLE INCOME $356,000