MATTSON CORPORATION ON JANUARY1 THIS YEAR RECEIVED 2400 FROM

MATTSON CORPORATION ON JANUARY1. THIS YEAR RECEIVED 2400 FROM A CUSTOMER TO REPAIR AND MAINTAIN COPIERS UNDER 3 YEAR CONTRACT. BOOK INCOME 800.00 FOR THIS YEAR.

TAX PURPOSES 2400 WAS INCLUDED IN TAXABLE INCOME.

NET INCOME OF 300,000 FOR THE YEAR BEFORE PROVISION FOR FEDERAL INCOME TAXES. WHAT AMOUNT FOR TAXABLE AMOUNT FOR THE YEAR ON SCHEDULE M1 FORM 1120

298400

300800

301600

302400

Solution

Ans) Let Net Income be Taxable Income before tax, then amount for taxable purposes to be mentioned in Schedule M1 Form 1120 = 300000-1600(Advance received) = 298400 (Ans)

Note: Advance received $(2400-800) i.e. $1600 today for the future period is a liability for the current year. It will become income in the future year and will finally be recorded as income in the future taxable period.