Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

TPW, a calendar year taxpayer, sold land with a $543,000 tax basis for $790,000 in February. The purchaser paid $83,000 cash at closing and gave

TPW, a calendar year taxpayer, sold land with a $543,000 tax basis for $790,000 in February. The purchaser paid $83,000 cash at closing and gave TPW an interest-bearing note for the $707,000 remaining price. In August, TPW received a $58,550 payment from the purchaser consisting of a $35,350 principal payment and a $23,200 interest payment. Assume that TPW uses the installment sale method of accounting.

  1. Compute the difference between TPWs book and tax income resulting from the installment sale method.
  2. Is this difference favorable or unfavorable?
  3. Using a 21 percent tax rate, compute PTRs deferred tax asset or liability (identify which) resulting from the book/tax difference.
  4. image text in transcribedimage text in transcribedimage text in transcribed
TPW, a calendar year taxpayer, sold land with a $543,000 tax basis for $790,000 in February. The purchaser paid $83,000 cash at closing and gave TPW an interest- bearing note for the $707,000 remaining price. In August, TPW received a $58,550 payment from the purchaser consisting of a $35,350 principal payment and a $23,200 interest payment. Assume that TPW uses the installment sale method of accounting. a. Compute the difference between TPW's book and tax income resulting from the installment sale method. b. Is this difference favorable or unfavorable? c. Using a 21 percent tax rate, compute PTR's deferred tax asset or liability (identify which) resulting from the book/tax difference. Complete this question by entering your answers in the tabs below. Required ARequired B Required C Compute the difference between TPW's book and tax income resulting from the installme percentage to 2 decimal places, and intermediate calculations to the nearest whole dollar Book/tax difference Required B Required A Required ARequired B RequiredC Is this difference favorable or unfavorable? OFavorable OUnfavorable Required C Required A Required A Required B Required C Compute the difference between TPW's book and tax income resulting from the installme percentage to 2 decimal places, and intermediate calculations to the nearest whole dollar K Required B Requiredc

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sawyers Internal Auditing Enhancing And Protecting Organizational Value

Authors: The Internal Audit Foundation

7th Edition

1634540522, 9781634540520

More Books

Students also viewed these Accounting questions

Question

Evaluate the importance of the employee handbook.

Answered: 1 week ago

Question

Discuss the steps in the progressive discipline approach.

Answered: 1 week ago