Olong Ltd. started operations in 20X6. The company provided the following information for its warranty balances...
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Olong Ltd. started operations in 20X6. The company provided the following information for its warranty balances for the past four years: Warranty costs accrued Costs incurred-warranty work. Costs incurred-development costs Amortization-development costs Tax rate Development costs: Tax basis Warranty costs: Tax basis 20X6 Development costs: Accounting basis Warranty costs: Accounting basis $ Required: 1. What is the tax basis for development costs and the provision for warranty costs in each year? $ 0 $ Development costs: Deferred income tax balance Warranty costs: Deferred income tax balance 20X7 0 $ 20X6 $ 56,000 $ (8,000) $ $ 20X6 $36,000 28,000 56,000 20X6 0 $ 0 $ 20X7 $ (22,400) 20X8 0 40% 3,200 2. What is the accounting basis for development costs and the provision for warranty costs in each year? (Amounts to be deducted should be indicated with a minus sign.) 0 20X7 $31,000 23,000 61,000 11,000 38% 20X9 0 $ 0 $ 20X7 0 20X8 0 3. What is the deferred tax balance in each year? (Amounts to be deducted should be indicated with a minus sign.) 20X8 $33,000 41,000 71,000 24,500 38% 20X8 20X9 20X9 $51,000 33,000 36,000 36,000 36 % 20X9 Olong Ltd. started operations in 20X6. The company provided the following information for its warranty balances for the past four years: Warranty costs accrued Costs incurred-warranty work. Costs incurred-development costs Amortization-development costs Tax rate Development costs: Tax basis Warranty costs: Tax basis 20X6 Development costs: Accounting basis Warranty costs: Accounting basis $ Required: 1. What is the tax basis for development costs and the provision for warranty costs in each year? $ 0 $ Development costs: Deferred income tax balance Warranty costs: Deferred income tax balance 20X7 0 $ 20X6 $ 56,000 $ (8,000) $ $ 20X6 $36,000 28,000 56,000 20X6 0 $ 0 $ 20X7 $ (22,400) 20X8 0 40% 3,200 2. What is the accounting basis for development costs and the provision for warranty costs in each year? (Amounts to be deducted should be indicated with a minus sign.) 0 20X7 $31,000 23,000 61,000 11,000 38% 20X9 0 $ 0 $ 20X7 0 20X8 0 3. What is the deferred tax balance in each year? (Amounts to be deducted should be indicated with a minus sign.) 20X8 $33,000 41,000 71,000 24,500 38% 20X8 20X9 20X9 $51,000 33,000 36,000 36,000 36 % 20X9
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Related Book For
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I
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