Problem 07-34 (Static) [LO 7-1, 7-5, 7-9, 7-11) SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. . SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. . SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. SEP's net book income before tax Adjustments Research costs Depreciation Amortization SEP's taxable income $ $ Amount 918,000 (75,000) (21,778) (1.832) 894,300

Problem 07-34 (Static) [LO 7-1, 7-5, 7-9, 7-11) SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. . SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. . SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. SEP's net book income before tax Adjustments Research costs Depreciation Amortization SEP's taxable income $ $ Amount 918,000 (75,000) (21,778) (1.832) 894,300

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter3: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 34P

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EP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information: SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. SEP’s depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP’s taxable income
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