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For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,016,000. Selected information for 2021 from Fidelity's records follows: Interest income on municipal governmental bonds Depreciation claimed 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 $ 72,000 96,000 168,000 46,000 36,000

For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,016,000. Selected information for 2021 from Fidelity's records follows: Interest income on municipal governmental bonds Depreciation claimed 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 $ 72,000 96,000 168,000 46,000 36,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,016,000. Selected information for 2021 from Fidelity's records follows: Interest income on municipal governmental bonds Depreciation claimed on the 2021 tax return in excess of depreciation on the income statement Carrying amount of depreciable assets in excess of their basis at year-end Warranty expense reported on the income statement Actual warranty expenditures in 2021 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $18,000 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? Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 Pretax accounting income Permanent difference Determine the amounts necessary to record income taxes for 2021. (Enter your answers in thousands rounded to 1 decimal place. Amounts to be deducted should be indicated with a minus sign.) Tax Rate % Income subject to taxation Temporary difference Depreciation Taxable income (income tax return) $ 1,016 $ 1,016 $ 72,000 96,000 X X 168,000 46,000 36,000 $ 1,016 X = Tax $ Recorded as:
Transcribed Image Text:For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,016,000. Selected information for 2021 from Fidelity's records follows: Interest income on municipal governmental bonds Depreciation claimed on the 2021 tax return in excess of depreciation on the income statement Carrying amount of depreciable assets in excess of their basis at year-end Warranty expense reported on the income statement Actual warranty expenditures in 2021 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $18,000 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? Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 Pretax accounting income Permanent difference Determine the amounts necessary to record income taxes for 2021. (Enter your answers in thousands rounded to 1 decimal place. Amounts to be deducted should be indicated with a minus sign.) Tax Rate % Income subject to taxation Temporary difference Depreciation Taxable income (income tax return) $ 1,016 $ 1,016 $ 72,000 96,000 X X 168,000 46,000 36,000 $ 1,016 X = Tax $ Recorded as:
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