For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,008,000. Selected information for 2021 from Fidelity's records follows: Interest income on municipal governmental bonds Depreciation claimed on the 2021 tax return in $ 64,000 excess 88,000 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 152,000 42,000 32,000 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $16,000 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 Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations to 2 decimal places. Enter your answers in thousands (i.e., 5,500 should be entered as 5.5).) View transaction list Journal entry worksheet
For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $1,008,000. Selected information for 2021 from Fidelity's records follows: Interest income on municipal governmental bonds Depreciation claimed on the 2021 tax return in $ 64,000 excess 88,000 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 152,000 42,000 32,000 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $16,000 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 Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations to 2 decimal places. Enter your answers in thousands (i.e., 5,500 should be entered as 5.5).) View transaction list Journal entry worksheet
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 5BCRQ
Related questions
Question
Transcribed Image Text:For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of
$1,008,000. Selected information for 2021 from Fidelity's records follows:
$ 64,000
Interest income on municipal governmental bonds
Depreciation claimed on the 2021 tax return in
excess
88,000
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
152,000
42,000
32,000
Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and
$16,000 in its deferred tax asset and deferred tax liability accounts, respectively.
Required:
1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal
entry.
2. What is Fidelity's 2021 net income?
Complete this question by entering your answers in the tabs below.
Required 1
Calculation
Required 1 GJ Required 2
Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first
account field. Round intermediate calculations to 2 decimal places. Enter your answers in thousands (i.e., 5,500 should be entered as
5.5).)
View transaction list
Journal entry worksheet
Transcribed Image Text:$ 64,000
Interest income on municipal governmental bonds
Depreciation claimed on the 2021 tax return in
excess
88,000
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
152,000
42,000
32,000
Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and
$16,000 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
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 %
Тax $
Recorded as:
Pretax accounting income
$
1,008
Permanent difference
Income subject to taxation
$
1,008
X
Temporary difference
Taxable income (income tax return)
$
1,008
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning