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Hunter Company purchased a light truck on January 2, 2019 for $18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: $3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of $100,000, cost of goods sold of $60,000, and operating expenses (excluding depreciation) of $15,000. The truck was disposed of on December 31, 2023, for $2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.

BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 11, Problem 14P
Textbook Problem

Hunter Company purchased a light truck on January 2, 2019 for $18,000. The truck, which will be used for deliveries, has the following characteristics:

Estimated life: 5 years

Estimated residual value: $3,000

Depreciation method for financial statements: straight-line method

Depreciation for income tax purposes: MACRS (3-year life)

From 2019 through 2023, each year, Hunter had sales of $100,000, cost of goods sold of $60,000, and operating expenses (excluding depreciation) of $15,000. The truck was disposed of on December 31, 2023, for $2,000.

Required:

  1. 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023.
  2. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023.
  3. 3. Compare the total income for all 5 years under Requirements 1 and 2.

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Chapter 11 Solutions

Intermediate Accounting: Reporting And Analysis
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