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Texark Inc., a calendar year taxpayer, reported $5,210,300 net income before tax on its financial statements prepared in accordance with GAAP. The corporation's records reveal the following information.

  • Depreciation expense per books was $713,700, and MACRS depreciation was 662,000.
  • Texark exchanged old equipment (-0- tax basis; $44,200 book basis) for new equipment (FMV $50,000). Book gain was included in book income, although the exchange was non-taxable for tax purposes.
  • Texark received a $100,000 insurance reimbursement for the destruction of machinery with a $29,000 tax basis and a $70,000 book basis. Texark spent $110,000 to replace the machinery before year-end.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9161223

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