Gamma reported sales of $4,000 in 2019 and no permanent book-tax income differences. It also recorded an estimated produ
Posted: Mon Apr 25, 2022 7:26 am
Gamma reported sales of $4,000 in 2019 and no permanent book-tax
income differences. It also
recorded an estimated product warranty liability and the related
warranty expense of $1,100 for book
purposes. There were no additional expenses in 2019. Under tax law,
Gamma cannot deduct the
estimated warranty expense until it actually provides the services
by repairing the product (pays for
repairs). The company’s tax rate is 40%. What is the JE for I.T.
expense for 2019?
B) Continuing the previous example, assume that Gamma made actual
warranty repairs at a total cost
of $1,100 in 2020. It also reported $2,500 in sales revenue and no
additional expenses for the year. Tax
rate is 40%. No other book/tax differences. What is the JE for I.T.
expense for 2020?
income differences. It also
recorded an estimated product warranty liability and the related
warranty expense of $1,100 for book
purposes. There were no additional expenses in 2019. Under tax law,
Gamma cannot deduct the
estimated warranty expense until it actually provides the services
by repairing the product (pays for
repairs). The company’s tax rate is 40%. What is the JE for I.T.
expense for 2019?
B) Continuing the previous example, assume that Gamma made actual
warranty repairs at a total cost
of $1,100 in 2020. It also reported $2,500 in sales revenue and no
additional expenses for the year. Tax
rate is 40%. No other book/tax differences. What is the JE for I.T.
expense for 2020?