Questions:
The following information has been obtained for the Gocker Corporation.
1. Prior to 2012, taxable income and pretax financial income were identical.
2. Pretax financial income is $1,728,300 in 2012 and $1,439,500 in 2013.
3. On January 1, 2012, equipment costing $1,288,000 is purchased. It is to be depreciated on a straightline basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.)
4. Interest of $65,700 was earned on tax-exempt municipal obligations in 2013.
5. Included in 2013 pretax financial income is an extraordinary gain of $209,100, which is fully taxable.
6. The tax rate is 38% for all periods.
7. Taxable income is expected in all future years.
Part-1
Prepare the bottom portion of Gocker's 2013 income statement, beginning with "Income before income taxes and extraordinary item."