Finley Company Sells Office Equipment

Finley Company sells office equipment. On January 1, 2015, Finley entered into an installment sale contract with Miller Company for a six-year period expiring January 1, 2021. Equal annual payments under the installment sale are $702,000 and are due on January 1. The first payment was made on January 1, 2015.Additional information is as follows:The cash selling price of the equipment, i.e., the amount that would be realized on an outright sale, is $3,438,000.The cost of sales relating to the equipment is $2,868,000.The finance charges relating to the installment period are $774,000 based on a stated interest rate of 7% which is appropriate. For tax purposes, Finley appropriately uses the accrual basis for recording finance charges.Circumstances are such that the collection of the installment sale is reasonably assured.The installment sale qualified for the installment method of reporting for tax purposes.Assume that the income tax rate is 30%.
InstructionsWhat income (loss) before income taxes should Finley appropriately record as a result of this transaction for the year ended December 31, 2015? Show supporting computations in good form.