The Racing Company had taxable income of $12,000 during 2014.Racing used accelerated depreciation for tax purposes ($3,400)and straight-line depreciation for accounting purposes ($2,000).Assuming Racing had no other temporary differences,what would the company's pretax accounting income be for 2014?

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Quizplus · Accepted Answer

The company's pretax accounting income is calculated by adding back the accelerated depreciation used for tax purposes and subtracting the straight-line depreciation used for accounting purposes from the taxable income. Thus, $12,000 + $3,400 - $2,000 = $13,400.

The Racing Company Had Taxable Income of $12,000 During 2014