Ski Company purchased a short-term investment on January 1, 20X1 as shown below. Cost of the...
Ski Company purchased a short-term investment on January 1, 20X1 as shown below.
| Cost of the short-term investment | 225,000 |
| Fair value of the short-term investment at year-end | 273,000 |
| Sales | 950,000 |
| Operating expenses | 811,000 |
| Tax rate | 30% |
| Estimated tax payment | 23,000 |
What is net income for 20X1?
Homework Answers
| Net Income for 20X1 | |
| Sales | 950000 |
| Add: Increase in fair value of short term investment | 48000 |
| Less: Operating Expenses | 811000 |
| Operating Income | 187000 |
| Tax @30% | 56100 |
| Net Income | 130900 |
Notes:
1. Increase in fair value of short term investments is recognised
in income Statement.
2. Acutal tax liability is considered in income statement.
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