Net income of Miller Corporation for the year ending December 31, 1979, is \(\$ 600,000\) based on the accounting methods actually used by the firm. You have been asked to determine the amount of net income that would have been reported under several alternative accounting methods. The income tax rate is 40 percent, and the same accounting methods are used for financial reporting and income tax purposes unless otherwise indicated. Each of the following questions should be considered independently.

a Miller Corporation acquired a machine costing \(\$ 300,000\) on January 1, 1979. The machine was depreciated during 1979 using the straight-line method based on a 5-year useful life and zero salvage value. What would net income have been if the sum-of-theyears'-digits depreciation method had been used? Ignore the investment tax credit.

b Miller Corporation obtained an investment tax credit of \(\$ 10,000\) on the machine acquired in part

a. It accounted for the investment credit using the flow-through method. What would net income have been if the deferral method had been used? In responding to this question, assume that the machine was depreciated using the straight-line method based on a 5 -year life and zero salvage value. Also assume that this is the first year that investment tax credits have been realized by Miller Corporation.

c Miller Corporation used the lower-of-cost-or-market method of accounting for its 18 -percent investment in the common shares of General Tools Corporation. During 1979. General Tools Corporation earned \(\$ 200,000\) and paid dividends of \(\$ 50,000\). The market value of General Tools Corporation was the same at the end of 1979 as it was at the beginning of 1979. What would net income have been during 1979 if Miller Corporation continued to account for the investment under the lower-of-cost-or-market method for income tax purposes but used the equity method for financial reporting purposes?

d Miller Corporation used the FIFO inventory cost-flow assumption. Under FIFO, the January 1, 1979, inventory was \(\$ 300,000\) and the December 31,1979 , inventory was \(\$ 320,000\). Under LIFO, the January 1, 1979, inventory would have been \(\$ 240,000\) and the December 31, 1979, inventory would have been \(\$ 230,000\). What would net income have been if the LIFO inventory costing assumption had been used?