For the year ended December 31, 2016, Fidelity Engineering reported pretax accounting income of $977,000. Selected information for 2016 from Fidelity’s records follows: Interest income on municipal bonds $32,000 Depreciation claimed on the 2016 tax return in excess of depreciation on the income statement 55,000 Carrying amount of depreciable assets in excess of their tax basis at year-end 85,000 Warranty expense reported on the income statement 26,000 Actual warranty expenditures in 2016 16,000 Fidelity’s income tax rate is 40%. At January 1, 2016, 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 2016 and prepare the appropriate journal entry. 2. What is Fidelity’s 2016 net income?
For the year ended December 31, 2016, Fidelity Engineering reported pretax accounting income of $977,000. Selected information for 2016 from Fidelity’s records follows: Interest income on municipal bonds $32,000
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