Suppose that GoPro expects warranty costs to be $40,000 but they actually have warranty costs of $35,000. How will this impact their taxes? This has no impact on taxes for GoPro This would create additional taxes for GoPro This will reduce the amount of taxes GoPro must pay None of the above are true
Added by Mackenzie F.
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Warranty costs are considered an expense for a company, and they can reduce taxable income. Show more…
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Akash M.
g reported pretax accounting income of $860 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $1,140 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be reduced under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be:
Manasvee S.
Taxable income and pretax financial income would be identical for Marin Co., except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared. Taxable income 2016 2017 2018 Excess of revenues over expenses (excluding two temporary differences) $154,000 $215,000 $93,500 Installment gross profit collected $8,500 $8,500 $8,500 Expenditures for warranties ($5,500) ($5,500) ($5,500) Taxable income $157,000 $218,000 $96,500 Pretax financial income 2016 2017 2018 Excess of revenues over expenses (excluding two temporary differences) $154,000 $215,000 $93,500 Installment gross profit recognized $25,500 $0 $0 Estimated cost of warranties ($16,500) $0 $0 Income before taxes $163,000 $215,000 $93,500 The tax rates in effect are 2016: 40%; 2017 and 2018: 45%. All tax rates were enacted into law on January 1, 2016. No deferred income taxes existed at the beginning of 2016. Taxable income is expected in all future years. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016, 2017, and 2018.
Madhur L.
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