A reconciliation of pretax financial statement income to taxable income is shown below for Fieval Industries for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%. Pretax accounting income (income statement)$300,000 Interest revenue on municipal securities (15,000) Warranty expense in excess of deductible amount 25,000 Depreciation in excess of financial statement amount (70,000) Taxable income (tax return)$240,000 What amount(s) should Fieval report related to deferred income taxes in its 2018 balance sheet?

A deferred tax asset and deferred tax liability can not be offset unless prescribed

Answered: A reconciliation of pretax financial…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A reconciliation of pretax financial statement income to taxable income is shown below for Fieval Industries for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%.
Pretax accounting income (income statement)	$	300,000
Interest revenue on municipal securities		(15,000	)
Warranty expense in excess of deductible amount		25,000
Depreciation in excess of financial statement amount		(70,000	)
Taxable income (tax return)	$	240,000

What amount(s) should Fieval report related to deferred income taxes in its 2018 balance sheet?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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