4-12-11 Solution

4-12-11 Solution - EXERCISE 22-1 (a) The net income to be...

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EXERCISE 22-1 (a) The net income to be reported in 2010, using the retrospective approach, would be computed as follows: Income before income tax. .................................................... $700,000 Income tax (35% X $700,000). ............................................. 245,000 Net income. ........................................................................... $455,000 (b) Construction in Process. ................................................................... 170,000 Deferred Tax Liability ($170,000 X 35%). .............................. 59,500 Retained Earnings. ................................................................. 110,500* *($170,000 X 65% = $110,500)
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EXERCISE 22-4 2008 (a) Retained earnings, January 1, as reported. ................................................. $160,000 Cumulative effect of change in accounting principle to average cost. ....................................................................... (13,000 )* Retained earnings, January 1, as adjusted. ................................................. $147,000 *[$8,000 (2006) + $5,000 (2007)] 2011 (b) Retained earnings, January 1, as reported. ................................................. $590,000 Cumulative effect of change in accounting principle to average cost. ....................................................................... (20,000
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4-12-11 Solution - EXERCISE 22-1 (a) The net income to be...

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