Berkshire Corp. sometimes sells property on an installment basis. In those cases, Berkshire reports income in its income statement in the year of the sale but reports installment income by the installment method on the tax return. Installment income in 2021 was $230 million, which Berkshire expects to collect equally over the next four years. The tax rate is 25%, but based on an enacted law, is scheduled to become 35% in 2023. Berkshire’s pretax accounting income for the 2021 income statement was $640 million. Of this amount, $52 million is non-taxable revenue from proceeds of a life insurance policy. There were no differences between accounting income and taxable income other than those described above and no cumulative temporary differences existed at the beginning of the year. Required: 1. Prepare the appropriate journal entry to record Berkshire’s 2021 income taxes. 2. What is Berkshire’s 2021 net income?
Berkshire Corp. sometimes sells property on an installment basis. In those cases, Berkshire reports income in its income statement in the year of the sale but reports installment income by the installment method on the tax return. Installment income in 2021 was $230 million, which Berkshire expects to collect equally over the next four years. The tax rate is 25%, but based on an enacted law, is scheduled to become 35% in 2023.
Berkshire’s pretax accounting income for the 2021 income statement was $640 million. Of this amount, $52 million is non-taxable revenue from proceeds of a life insurance policy. There were no differences between accounting income and taxable income other than those described above and no cumulative temporary differences existed at the beginning of the year.
Required:
1. Prepare the appropriate
2. What is Berkshire’s 2021 net income?
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 3 images
