Question
On January 1, 2019, Crane Co., purchased a machine (its only depreciable asset) for $780000. The machine has a five-year life, and no salvage value.
On January 1, 2019, Crane Co., purchased a machine (its only depreciable asset) for $780000. The machine has a five-year life, and no salvage value. Sum-of-the-years'-digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting. Effective January 1, 2022, for financial statement reporting, Crane decided to change to the straight-line method for depreciation of the machine. Assume that Crane can justify the change. Crane's income before depreciation, before income taxes, and before the cumulative effect of the accounting change (if any), for the year ended December 31, 2022, is $630000. The income tax rate for 2022, as well as for the years 2019-2021, is 30%. What amount should Crane report as net income for the year ended December 31, 2022?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started