PORTH CONSTRUCTION USES THE PERCENTAGE OF COMPLETION METHOD

PORTH CONSTRUCTION USES THE PERCENTAGE OF COMPLETION METHOD FOR BOOK INCOME DETERMINATION AND COMPLETED CONTRACT IN DETERMINING TAXABLE INCOME

STARTED CONSTUCTION OF BUILDING TO BE COMPLETE NEXT YEAR. EXPECTS PROFIT OF 320,000.

RECOGNIZED PROFIT OF 80,000 THIS YEAR FOR BOOK PURPOSES,

HAS BOOK INCOME BEFORE TAXES OF 900,000. WHAT IS TAXABLE INCOME ON SCHEDULE M1 FORM 1120 FOR THE YEAR

580,0000

660,000

820,000

980,000

when using the completed contract method the profits earned are deferred
till the completion of the project

There fore to calculate taxable in come we deduct 80000 profit as calculated
by percetage of completion method

Taxable income = 900000- 80000 = $ 820000