Question: For the year ended December 31 2013 Fidelity Engineering reported

For the year ended December 31, 2013, Fidelity Engineering reported pretax accounting income of $977,000.
Selected information for 2013 from Fidelity’s records follows:
Interest income on municipal bonds $32,000
Depreciation claimed on the 2013 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 2013 16,000
Fidelity’s income tax rate is 40%. At January 1, 2013, 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 2013 and prepare the appropriate journal entry.
2. What is Fidelity’s 2013 net income?



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  • CreatedDecember 23, 2013
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