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    Assuming that Neasha elects to use the carryback provision what after tax net income (loss) is reported in 2007?

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    I Part:
    2) Revenue Recognize:

    The revenue recognition principle provides that revenue is recognized when:
    1- It is realized, 2- It is earned.
    Explain when revenues are a realized , b) realizable, and c) earned.

    II Part:

    Neasha Corporation reported the following results for its first three years of operation:
    2006- increase (before income taxes) $100,000
    2007-loss (before income taxes) (900,000)
    2008-income (before income taxes ) $1,000,000

    There were no permanent or temporary differences during these three years. Assume a corporate tax rate of 30% for 2006 and 2007, and 40% for 2008

    Assuming that Neasha elects to use the carryback provision what after tax net income (loss) is reported in 2007? (Assume that any deferred tax asst recognized is more likely than not to be realized)

    A) $(900,000)
    B) -0-
    C) $(870,000)
    D) $(550,000)

    2- Computation of taxable income.

    The record for Mal Co. show this data for 2008

    Gross profit installment sales recorded on the books was $360,000. Gross profit from collection of installment receivables was $270,000

    Life Insurance on officers was $2,900.

    Machinery was acquired in January for $300,000 Straight line depreciation over a ten year life no salvage value is used. For tax purpose. MARCS depreciation is used and Orkin may deduct 14% for 2008

    Interest received on tax exempt lowa State bonds was $6,000

    The estimated warranty liability related to 2008 sales was $19600. Repair cost under warranties during 2008 were $13,,600. The remainder will be incurred in 2009

    Pretax financial income is $700,000. The tax is 30%

    Instructions:

    a) Prepare a schedule stating with pretax financial income and compute taxable income.
    b) Prepare the journal entry to record income taxes for 2008.

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    https://brainmass.com/business/accounting/134994

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