E 16-7 Temporary difference; future deductible amounts; taxable income given LO16-3 Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2024, Lance has a warranty liability of $2 million and taxable income of $75 million. At December 31, 2023, Lance reported a deferred tax asset of $435,000 related to this difference in reporting warranties; it's only temporary difference. The enacted tax rate is 25% each year. Required: Prepare the appropriate journal entry to record Lance's income tax provision for 2024.
E 16-7 Temporary difference; future deductible amounts; taxable income given LO16-3 Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2024, Lance has a warranty liability of $2 million and taxable income of $75 million. At December 31, 2023, Lance reported a deferred tax asset of $435,000 related to this difference in reporting warranties; it's only temporary difference. The enacted tax rate is 25% each year. Required: Prepare the appropriate journal entry to record Lance's income tax provision for 2024.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 10E: Multiple Temporary Differences Vickers Company reports taxable income of 4,500 for 2019. Vickers has...
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![E 16-7 Temporary difference; future deductible amounts; taxable income given LO16-3
Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product
sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2024, Lance has a warranty
liability of $2 million and taxable income of $75 million. At December 31, 2023, Lance reported a deferred tax asset of $435,000 related
to this difference in reporting warranties; it's only temporary difference. The enacted tax rate is 25% each year.
Required:
Prepare the appropriate journal entry to record Lance's income tax provision for 2024.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87c896c5-a2bd-45d5-a2d4-a5c074e3a351%2Fdd2e64af-5e1f-4e96-af91-3f659e7e1fb8%2F8oo9e45_processed.jpeg&w=3840&q=75)
Transcribed Image Text:E 16-7 Temporary difference; future deductible amounts; taxable income given LO16-3
Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product
sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2024, Lance has a warranty
liability of $2 million and taxable income of $75 million. At December 31, 2023, Lance reported a deferred tax asset of $435,000 related
to this difference in reporting warranties; it's only temporary difference. The enacted tax rate is 25% each year.
Required:
Prepare the appropriate journal entry to record Lance's income tax provision for 2024.
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