Garden Company had pretax accounting income of $24,000 during 2014.Garden's only temporary difference for 2011 relates to a sale made in 2012 and recognized for accounting purposes at that time.However,Garden uses the installment sales method of revenue recognition for tax purposes.During 2014 Garden collected a receivable from the 2012 sale which resulted in $6,000 of income under the installment sales method.Garden's taxable income for 2014 would be

Question

Quizplus · Accepted Answer

Taxable income is calculated by adjusting the pretax accounting income for differences between accounting and tax treatments. In this case, the $6,000 collected in 2014 from the 2012 sale increases the taxable income to $30,000 ($24,000 pretax accounting income + $6,000 from the installment sale).

Garden Company Had Pretax Accounting Income of $24,000 During 2014