Question 1 0733 pts Creighton Corp. is a retailer. All of its operations are conducted in the US. It is an accrual method calendar year corporation, which began business in Year 1. For the year ended 12/31/Year 2 (not a typo, Year 2), Creighton reported $5,571,000 EBIT on its financial statements prepared in accordance with GAAP. The corporate records reveal the following information. Creighton's Year 2 book depreciation was $51,828 and its tax depreciation was $88,118. In Year 2, Creighton capitalized $32,670 indirect expenses to manufactured inventory for book purposes and $48,020 indirect expenses to manufactured inventory under the tax uniform capitalization rules. The difference in these amounts was attributable to executive compensation. . Due to the increased capitalized executive compensation, Creighton's Year 2 cost of goods sold for book purposes was $1,093,800 and its cost of goods sold for tax purposes was $1,107,200. During Year 2, Creighton sold assets yielding the following gains/losses: o 1231 gain of $800,000 o Capital losses of $500,000 1245 gain of $50,000 In Year 2, Creighton developed a patent with a 17 year-life and incurred research expenditures of $300,000. In Year 2, Creighton's CFO died in a skiing accident. The corporation collected $2 million in life insurance proceeds. During Year 2. Creighton paid $5,000 premium on the policy. In December Year 2. Creighton settled a lawsuit and agreed to pay $82,000 . inventory for book purposes and $48,020 indirect expenses to manufactured inventory under the tax uniform capitalization rules. The difference in these amounts was attributable to executive compensation. Due to the increased capitalized executive compensation, Creighton's Year 2 cost of goods sold for book purposes was $1,093,800 and its cost of goods sold for tax purposes was $1,107,200. . During Year 2, Creighton sold assets yielding the following gains/losses: o 1231 gain of $800,000 o Capital losses of $500,000 o 1245 gain of $50,000 In Year 2, Creighton developed a patent with a 17 year-life and incurred research expenditures of $300,000. In Year 2, Creighton's CFO died in a skiing accident. The corporation collected $2 million in life insurance proceeds. During Year 2, Creighton paid $5,000 premium on the policy. In December Year 2, Creighton settled a lawsuit and agreed to pay $82,000 to a customer for faulty goods. As of year-end, Creighton had not made payment to the customer. In Year 1 (not a typo - Year 1), Creighton deducted $500,000 worth of 1231 losses Creighton does not intend to claim any tax credits for Year 2. Required: USING THIS TEMPLATE: BT Rec Excel Template.xlsx Provide a Book to Tax Reconciliation computing Creighton's taxable income. Update the completed template here. BT Rec Excel Template Developer Tell me Data Review View Home AutoSave BE SU Insert Draw Page Layout Formulas Calibri (Body) 14 A A B 10.A 10 lili 29 Wrap Text Margn & Conter Accounting $ % ) Paste Alignment Number B D E Clipboard Font A23 x fx 1 Description of Items affecting Book-Tax Reconciliation 2 GAAP Net Income Before Tax: F $ amount 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Taxable income: 20 21 22 23 24 25 26 27 28 BT Rec
