For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,020,000. Selected information for 2021 from Fidelity's records follows: $ 76,000 Interest income on municipal governmental bonds Depreciation elaimed on the 2021 tax return in excess of depreciation on the income statement Carrying amount of depreciable assets in excess of their tax basis at year-end Warranty expense reported on the income statement Actual warranty expenditures in 2021 100,000 176, ००० 48,000 38,000 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $19,000 in its deferred tax asset and deferred tax liability accounts, respectively. Required: 1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry. 2. What is Fidelity's 2021 net income?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,020,000. Selected information
for 2021 from Fidelity's records follows:
Interest income on municipal governmental bonds
Depreciation claimed on the 2021 tax return in excenn
of depreciation on the income statement
Carrying amount of depreciable anseta in excess
of their tax basis at year-end
Warranty expense reported on the income statement
Actual warranty expenditures in 2021
$ 76,000
100,000
176,000
48,000
38,000
Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $19,000 in its deferred tax asset
and deferred tax liability accounts, respectively.
Required:
1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry.
2. What is Fidelity's 2021 net income?
Transcribed Image Text:For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,020,000. Selected information for 2021 from Fidelity's records follows: Interest income on municipal governmental bonds Depreciation claimed on the 2021 tax return in excenn of depreciation on the income statement Carrying amount of depreciable anseta in excess of their tax basis at year-end Warranty expense reported on the income statement Actual warranty expenditures in 2021 $ 76,000 100,000 176,000 48,000 38,000 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $19,000 in its deferred tax asset and deferred tax liability accounts, respectively. Required: 1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry. 2. What is Fidelity's 2021 net income?
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