Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting Income of $992,000. Selected Information for
2021 from Fidelity's records follows:
Interest income on municipal governmental bonds
Depreciation claimed on the 2021 tax return in excess
of depreciation on the income statement
Carrying amount of depreciable assets in excess
of their tax basis at year-end
Warranty expense reported on the income statement
Actual warranty expenditures in 2021
Fidelity's Income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $12,000 in Its deferred tax asset
and deferred tax liability accounts, respectively.
Required:
1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry.
2. What is Fidelity's 2021 net income?
Complete this question by entering your answers in the tabs below.
Required 1
Calculation
Required 1 GJ Required 2
Pretax accounting income
Permanent difference
Determine…
16. Umasa Company reported rental revenue of P2,210,000 in the cash basis income tax return for the year ended November 30, 2020. Rent receivable – Nov. 30, 2020 is P1,060,000; Rent receivable – Nov. 30, 2019 is P800,000; and Uncollectible rent written off during the fiscal year is P30,000. Under accrual basis, what amount should be reported as rent revenue?
a. P1,920,000
b. P2,240,000
c. P2,500,000
d. P1,980,000
For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,020,000. Selected information
for 2021 from Fidelity's records follows:
Interest income on municipal governmental bonds
Depreciation claimed on the 2021 tax return in excenn
of depreciation on the income statement
Carrying amount of depreciable anseta in excess
of their tax basis at year-end
Warranty expense reported on the income statement
Actual warranty expenditures in 2021
$ 76,000
100,000
176,000
48,000
38,000
Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $19,000 in its deferred tax asset
and deferred tax liability accounts, respectively.
Required:
1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry.
2. What is Fidelity's 2021 net income?
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- For the year ended December 31, 2023, Bramble Ltd. reported income before income taxes of $90,000. In 2023, Bramble Ltd. paid $45,000 for rent; of this amount, $15,000 was expensed in 2023. The remaining $30,000 was treated as a prepaid expense for accounting purposes and would be expensed equally over the 2024-2025 period. The full $45,000 was deductible for tax purposes in 2023. The company paid $72,000 in 2023 for membership in a local golf club (which was not deductible for tax purposes). In 2023 Bramble Ltd. began offering a 1-year warranty on all merchandise sold. Warranty expenses for 2023 were $34,000, of which $26,000 was actual repairs for 2023 and the remaining $8,000 was estimated repairs to be completed in 2024. Meal and entertainment expenses totalled $22,000 in 2023, only half of which were deductible for income tax purposes. Depreciation expense for 2023 was $230,000. Capital Cost Allowance (CCA) claimed for the year was $252,000. Bramble was subject to a 20% income tax…arrow_forwardFor the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,036,000. Selected information for 2021 from Fidelity’s records follows: Interest income on municipal governmental bonds $ 92,000 Depreciation claimed on the 2021 tax return in excessof depreciation on the income statement 116,000 Carrying amount of depreciable assets in excessof their tax basis at year-end 208,000 Warranty expense reported on the income statement 56,000 Actual warranty expenditures in 2021 46,000 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $23,000 in its deferred tax asset and deferred tax liability accounts, respectively. Required:1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry.2. What is Fidelity’s 2021 net income?arrow_forwardFor the year ended December 31, 2023, Bonita Ltd. reported income before income taxes of $100,000. In 2023, Bonita Ltd. paid $66,000 for rent; of this amount, $22,000 was expensed in 2023. The remaining $44,000 was treated as a prepaid expense for accounting purposes and would be expensed equally over the 2024-2025 period. The full $66,000 was deductible for tax purposes in 2023. The company paid $76,000 in 2023 for membership in a local golf club (which was not deductible for tax purposes). In 2023 Bonita Ltd. began offering a 1-year warranty on all merchandise sold. Warranty expenses for 2023 were $43,000, of which $27,000 was actual repairs for 2023 and the remaining $16,000 was estimated repairs to be completed in 2024. Meal and entertainment expenses totalled $21,000 in 2023, only half of which were deductible for income tax purposes. Depreciation expense for 2023 was $170,000. Capital Cost Allowance (CCA) claimed for the year was $200,000. Bonita was subject to a 20% income tax…arrow_forward
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