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Packer Co.’s 2018 income statement reported $130,000 in income before provisions for income taxes. To compute...

Packer Co.’s 2018 income statement reported $130,000 in income before provisions for income taxes. To compute the provision for federal income taxes, the following 2018 data are provided:

Rent received in advance $ 22,000
Income from exempt municipal bonds $ 17,000
Depreciation deducted for income tax purposes $ 18,000
Depreciation deducted for financial reporting $ 10,000

If the alternative minimum tax provisions are ignored, what amount should Packer report as taxable income?

Multiple Choice

130,000

117,000

125,000

127,000

Solutions

Expert Solution

Answer--D. $127000

Amount should Packer report as taxable income:-

Pre-tax accounting income                                                                                                      $130,000

Add- advance rent (taxable, but not included in pre-tax accounting income)                                   $22,000

Less- municipal bond income (this is included in pre-tax accounting income, but is not taxable)     ($17,000)

Less -depreciation for tax in excess of depreciation for the books                                                 ($8,000)

Equals taxable income                                                                                                           $127,000

ekkarill92 answered 1 year ago
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