Question

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Problem 4-4 (Part Level Submission) Swifty Inc. reported income from continuing operations before tax of $1,969,000 during 2017. Additional transactions occurring in 2017 but not included in the $1,969,000 are as follows: 1. The corporation experienced an insured flood loss of $88,000 during the year. 2. At the beginning of 2015, the corporation purchased a machine for $59,400 (residual value of $9,900) that has a useful life of six years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, but failed to deduct the residual value in calculating the depreciable amount. 3. The sale of FV-NI investments resulted in a loss of $117,700. 4. When its president died, the corporation gained $110,000 from an insurance policy. The cash surrender value of this policy had been carried on 5. The corporation disposed of its recreational division at a loss of $126,500 before tax. Assume that this transaction meets the criteria for 6. The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years the books as an investment in the amount of $50,600 (the gain is non-taxable). accounting treatment as discontinued operations is to increase 2015 income by $66,000 and decrease 2016 income by $22,000 before taxes. The FIFO method has been used for 2017.

Answer 1

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