Western Vole-taic started operations early in 2022, making and selling kits to convert gas vehicles into...
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Western Vole-taic started operations early in 2022, making and selling kits to convert gas vehicles into fully electric vehicles. The following events occurred during their first year: a. Paid $2,000 for life insurance on the CEO. b. Purchased manufacturing equipment with a 10-year life for $450,000. WV uses straight-line depreciation for financial statement purposes and a 30% rate for tax purposes. c. 2022 sales resulted in estimated product warranties of $40,000. WV incurred $3,500 of warranty costs during 2020. d. Earned $250,000 of income before income taxes, which is reported on their income statement. WV is subject to an income tax rate of 23%. Required: Show calculations for Income tax expense for 2022. Prepare a reconciliation between Income tax expense and Income tax payable. • Identify which of the reconciling items will carry over into 2023. How will the treatment of these items differ in 2023 from their treatment in 2022? Western Vole-taic started operations early in 2022, making and selling kits to convert gas vehicles into fully electric vehicles. The following events occurred during their first year: a. Paid $2,000 for life insurance on the CEO. b. Purchased manufacturing equipment with a 10-year life for $450,000. WV uses straight-line depreciation for financial statement purposes and a 30% rate for tax purposes. c. 2022 sales resulted in estimated product warranties of $40,000. WV incurred $3,500 of warranty costs during 2020. d. Earned $250,000 of income before income taxes, which is reported on their income statement. WV is subject to an income tax rate of 23%. Required: Show calculations for Income tax expense for 2022. Prepare a reconciliation between Income tax expense and Income tax payable. • Identify which of the reconciling items will carry over into 2023. How will the treatment of these items differ in 2023 from their treatment in 2022?
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To calculate the income tax expense for 2022 and prepare the reconciliation between income tax expense and income tax payable we need to consider the ... View the full answer
Related Book For
Introduction to Accounting An Integrated Approach
ISBN: 978-0078136603
6th edition
Authors: Penne Ainsworth, Dan Deines
Posted Date:
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