Reconciling financial income with taxable income
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I'm keep getting jumbled up with the numbers! PLEASE HELP ME! I need help with Section A. Something to just keep my number straight!
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Solution Summary
The solution explains how to reconcile the financial income with taxable income given the details for the differences. It also explains how to calculate the deferred taxes - both asset and liabilities
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In 2004, the initial year of its existence, Garner Company's accountant, in preparing both the income statement and the tax return, developed the following list of items causing differences between accounting and taxable income:
1. The company sells its merchandise on an installment contract basis. In 2004, Garner elected, for tax purposes, to report the gross profit from these sales in the years the receivables are collected. However, for financial statement purposes, the company recognized all the gross profit in 2004. These procedures created a $320,000 difference between book and taxable incomes. The future collection of the installment contracts receivables are expected to result in taxable amounts of $160,000 in each of the next two years. (Note: the company treats installment contracts receivable as a current asset on its balance sheet.)
2. The company has also chosen to depreciate all of its depreciable assets on an ...
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