The following information has been obtained for Sheridan Corporation. 1. Prior to 2020, taxable income and pretax financial income were identical. 2. Pretax financial income is $1,634,000 in 2020 and $1,359,000 in 2021. 3. On January 1, 2020, equipment costing $1,260,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.) Interest of $57,000 was earned on tax-exempt municipal obligations in 2021. 5. Included in 2021 pretax fınancial income is a gain on discontinued operations of $195,000, which is fully taxable. The tax rate is 20% for all periods. 7. Taxable income is expected in all future years. 4. 6.
The following information has been obtained for Sheridan Corporation. 1. Prior to 2020, taxable income and pretax financial income were identical. 2. Pretax financial income is $1,634,000 in 2020 and $1,359,000 in 2021. 3. On January 1, 2020, equipment costing $1,260,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.) Interest of $57,000 was earned on tax-exempt municipal obligations in 2021. 5. Included in 2021 pretax fınancial income is a gain on discontinued operations of $195,000, which is fully taxable. The tax rate is 20% for all periods. 7. Taxable income is expected in all future years. 4. 6.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter9: Operating Activities
Section: Chapter Questions
Problem 2GIC
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Transcribed Image Text:Prepare the bottom portion of Sheridan's 2021 income statement, beginning with "Income from continuing operations before
income taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Sheridan Corporation
Income Statement (Partial)
For the Year Ended December 31, 2021
icome from Continuing Operations before Income Taxes
1164000
ncome Tax Expense
Current
Deferred
189000
ncome from Continuing Operations
Gain on Discontinued Operations
195000
Less
-39000
156000
let Income / (Loss)
%24
%24
>
>
Transcribed Image Text:The following information has been obtained for Sheridan Corporation.
1.
Prior to 2020, taxable income and pretax financial income were identical.
2.
Pretax fınancial income is $1,634,000 in 2020 and $1,359,000 in 2021.
On January 1, 2020, equipment costing $1,260,000 is purchased. It is to be depreciated on a straight-line basis over 5 years
for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as
discussed in Appendix 11A.)
3.
Interest of $57,000 was earned on tax-exempt municipal obligations in 2021.
Included in 2021 pretax financial income is a gain on discontinued operations of $195,000, which is fully taxable.
6.
The tax rate is 20% for all periods.
7.
Taxable income is expected in all future years.
4.
5.
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