TPW, a calendar year taxpayer, sold land with a $542,000 taxbasis for $785,000 in...

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Accounting

TPW, a calendar year taxpayer, sold land with a $542,000 taxbasis for $785,000 in February. The purchaser paid $82,000 cash atclosing and gave TPW an interest-bearing note for the $703,000remaining price. In August, TPW received a $58,250 payment from thepurchaser consisting of a $35,150 principal payment and a $23,100interest payment. Assume that TPW uses the installment sale methodof accounting.
Compute the difference between TPW’s book and tax incomeresulting from the installment sale method.
Is this difference favorable or unfavorable?
Using a 21 percent tax rate, compute PTR’s deferred tax asset orliability (identify which) resulting from the book/taxdifference.

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Part A The book profit income made on the sales 785000 542000 243000 Under instalment sales method he receives 82000 cash and an interest bearing note of 703000 In the current year he receives 58250 on the See Answer

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In: AccountingTPW, a calendar year taxpayer, sold land with a $542,000 taxbasis for $785,000 in February....TPW, a calendar year taxpayer, sold land with a $542,000 taxbasis for $785,000 in February. The purchaser paid $82,000 cash atclosing and gave TPW an interest-bearing note for the $703,000remaining price. In August, TPW received a $58,250 payment from thepurchaser consisting of a $35,150 principal payment and a $23,100interest payment. Assume that TPW uses the installment sale methodof accounting.Compute the difference between TPW’s book and tax incomeresulting from the installment sale method.Is this difference favorable or unfavorable?Using a 21 percent tax rate, compute PTR’s deferred tax asset orliability (identify which) resulting from the book/taxdifference.