The following information has been obtained for Tamarisk Corporation.1. Prior to 2020, taxable income and pretax financial income were identical.2. Pretax financial income is $1,575,000 in 2020 and $1,425,000 in 2021.3. On January 1, 2020, equipment costing $1,200,000 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.)4. Interest of $54,000 was earned on tax-exempt municipal obligations in 2021.5. Included in 2021 pretax financial income is a gain on discontinued operations of $183,000, which is fully taxable.6. The tax rate is 20% for all periods.7. Taxable income is expected in all future years. Prepare the bottom portion of Tamarisk's 2021 income statement, beginning with "Income from continuing operations beforeincome taxes." (Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses eg. (45).)Tamarisk CorporationIncome Statement (Partial)For the Year Ended December 31, 2021Income from Continuing Operations before Income TaxesApplicable Income Tax24>>

The bottom income statement starts with income before tax and it is adjusted by some additional…

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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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The following information has been obtained for Tamarisk Corporation.

1.		Prior to 2020, taxable income and pretax financial income were identical.
2.		Pretax financial income is $1,575,000 in 2020 and $1,425,000 in 2021.
3.		On January 1, 2020, equipment costing $1,200,000 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.)
4.		Interest of $54,000 was earned on tax-exempt municipal obligations in 2021.
5.		Included in 2021 pretax financial income is a gain on discontinued operations of $183,000, which is fully taxable.
6.		The tax rate is 20% for all periods.
7.		Taxable income is expected in all future years.

Prepare the bottom portion of Tamarisk's 2021 income statement, beginning with "Income from continuing operations before
income taxes." (Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses eg. (45).)
Tamarisk Corporation
Income Statement (Partial)
For the Year Ended December 31, 2021
Income from Continuing Operations before Income Taxes
Applicable Income Tax
24
>
>

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