Unicorn Development began operations in December 2024. When property is sold on an installment basis, Unicorn recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2024 installment income was $150,000 and will be collected over the next three years: 2025, $70,000; 2026, $50,000; 2027, $30,000. Unicorn also had product warranty costs of $35,000 expensed for financial reporting purposes in 2024. For tax purposes, only the $5,000 of warranty costs actually paid in 2024 was deducted. The remaining $30,000 will be deducted for tax purposes when paid over the next three years as follows: 2025, $18,000; 2026, $8,000; 2027, $4,000. Pretax accounting income for 2024 was $840,000, which includes interest revenue of $20,000 from municipal governmental bonds. The enacted tax rate is 20% for year 2024 and 25% for years 2025-2027. The amount of Unicorn's 2024 net income would be: O $670,000 $615,000 $656,000 $672,000

Unicorn Development began operations in December 2024. When property is sold on an installment basis, Unicorn recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2024 installment income was $150,000 and will be collected over the next three years: 2025, $70,000; 2026, $50,000; 2027, $30,000. Unicorn also had product warranty costs of $35,000 expensed for financial reporting purposes in 2024. For tax purposes, only the $5,000 of warranty costs actually paid in 2024 was deducted. The remaining $30,000 will be deducted for tax purposes when paid over the next three years as follows: 2025, $18,000; 2026, $8,000; 2027, $4,000. Pretax accounting income for 2024 was $840,000, which includes interest revenue of $20,000 from municipal governmental bonds. The enacted tax rate is 20% for year 2024 and 25% for years 2025-2027. The amount of Unicorn's 2024 net income would be: O $670,000 $615,000 $656,000 $672,000

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter16: Accounting Periods And Methods

Section: Chapter Questions

Problem 44P

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