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Kell Corp.’s $95,000 net income for the quarter ended September 30, 20X1, included the following after-tax items:
A $60,000 extraordinary gain, realized on April 30, 20X1, was allocated equally to the second, third, and fourth quarters of 20X1.
A $16,000 cumulative-effect loss resulting from a change in inventory method was recognized on August 2, 20X1.
In addition, Kell paid $48,000 on February 1, 20X1, for 20X1 calendar-year property taxes. Of this amount, $12,000 was allocated to the third quarter of 20X1.
For the quarter ended September 30, 20X1, Kell should report net income of:
Answer is: $91,000 because 95,000-20,000+16,000
I am confused why the $12,000 in taxes allocated to that quarter are not included in net income?
AUD - 81 (8/15)
BEC - 83 (10/15)
FAR - 84 (1/16)
REG - 79 (5/16)
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