Question
Company C had the following investment. For this question and the remaining questions, assume the investment...
Company C had the following investment. For this question and the remaining questions, assume the investment is long-term.
Help them determine the financial statement implications of the investment.
| Tax rate | 21% |
| Estimated tax payment | 21,000 |
Investment cost and ending fair values for 20X1 and 20X2:
| 20X1 | 20X2 | |
| Cost | 100,000 | 100,000 |
| Fair value | 110,000 | 134,000 |
| Total gain | 10,000 | 34,000 |
20X1 income statement information:
| Sales | 1,670,200 |
| Expenses | 1,536,600 |
Assuming the investement is long-term, what is the 20X1 net income?
Homework Answers
Answer #1
Please find the attached image,
Summary-
Long term investment's gain or loss are subject to treatment in other comprehesive income section and not treatable in income statement.
Tax expenses have been taken on estimation basis given in the question.This difference is due to different treatment of some items by tax authorities and accoutants.
Thanks
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