In 2025, Crane Company discovered an error while preparing its financial statements. A building constructed at the beginning of 2024 costing $1329900 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Crane also used straight-line depreciation for tax purposes and properly included depreciation on its tax return. Income tax payable was also reported correctly at a tax rate of 20%. Income before tax and depreciation expenses in 2025 was $430000. What would be the 2025 net income if depreciation had been recorded properly? $385670 O $394536 O $308536 O $430000

In 2025, Crane Company discovered an error while preparing its financial statements. A building constructed at the beginning of 2024 costing $1329900 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Crane also used straight-line depreciation for tax purposes and properly included depreciation on its tax return. Income tax payable was also reported correctly at a tax rate of 20%. Income before tax and depreciation expenses in 2025 was $430000. What would be the 2025 net income if depreciation had been recorded properly? $385670 O $394536 O $308536 O $430000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 5MC: At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial...

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At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.
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