Big-Deal Construction Company specializes in building dams. During Years 3, 4, and 5, three dams were completed.

The first dam was

started in Year 1 and completed in Year 3 at a profit before income taxes of $240,000. The second and third dams were started in Year 2.
The second dam was completed in Year 4 at a profit before income taxes of $252,000, and the third dam was completed in Year 5 at a
profit before income taxes of $300,000. The company uses percentage-of-completion accounting for financial reporting and the
completed-contract method of accounting for income tax purposes. The applicable income tax rate is 50% for each of the Years 1
through 5. Create a table outlining the year 1-5 numbers. One with total book income, one with total taxable income, and then show the
difference between the two.

Dam
1
2
3

Y1

Y2

Y3

20%

60%

20%

30%

60%

10%

10%

30%

50%

(a) Finacial reporting (book) income

Y1
Dam
Book Income
$ 24,000
1
Book Income
2
Book Income
3
Total Income (p)
$24,000
(b) Taxable Income
Taxable Income
Taxable Income
Taxable Income
Total TI (q)
Income after Tax
(d=p-r)

Y2
$ 72,000
$ 37,800
$ 15,000
$124,800

Y4

Y3
Y4
$ 24,000
$ 75,600 $ 12,600
$ 45,000 $ 75,000
$144,600 $ 87,600

$ 120,000

1
2
3

$ 126,000
$

$120,000

$ 24,000 $ 124,800 $

24,600

$126,000
$ (38,400)

ompleted. The first dam was

d dams were started in Year 2.
as completed in Year 5 at a
ial reporting and the
for each of the Years 1
e income, and then show the

Y5

10%

Y5

Total
$120,000
$126,000
$ 15,000 $150,000
$ 15,000 $396,000

$120,000
$126,000
$ 150,000 $150,000
$150,000 $396,000
$(135,000)