For the year ended December 31, 2018, Fidelity Engineering reported pretax accounting income of $977,000.Selected information for 2018 from Fidelity’s records follows:Interest income on municipal bonds $32,000Depreciation claimed on the 2018 tax return in excess of depreciation on the income statement 55,000Carrying amount of depreciable assets in excess of their tax basis at year-end 85,000Warranty expense reported on the income statement 26,000Actual warranty expenditures in 2018 16,000Fidelity’s income tax rate is 40%. At January 1, 2018, Fidelity’s records indicated balances of zero and $12,000in its deferred tax asset and deferred tax liability accounts, respectively.Required:1. Determine the amounts necessary to record income taxes for 2018, and prepare the appropriate journal entry.2. What is Fidelity’s 2018 net income?
For the year ended December 31, 2018, Fidelity Engineering reported pretax accounting income of $977,000.
Selected information for 2018 from Fidelity’s records follows:
Interest income on municipal bonds $32,000
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 2018 16,000
Fidelity’s income tax rate is 40%. At January 1, 2018, Fidelity’s records indicated balances of zero and $12,000
in its
Required:
1. Determine the amounts necessary to record income taxes for 2018, and prepare the appropriate
2. What is Fidelity’s 2018 net income?
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