In: Accounting
For the year ended December 31, 2018, Fidelity Engineering reported pretax accounting income of $980,000. Selected information for 2018 from Fidelity’s records follows: Interest income on municipal bonds $ 32,600 Depreciation claimed on the 2018 tax return in excess of depreciation on the income statement 55,900 Carrying amount of depreciable assets in excess of their tax basis at year-end 86,500 Warranty expense reported on the income statement 26,450 Actual warranty expenditures in 2018 16,300 Fidelity's income tax rate is 40%. At January 1, 2018, Fidelity's records indicated balances of zero and $12,240 in its deferred tax asset and deferred tax liability accounts, respectively. Required: 1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry. 2. What is Fidelity’s 2018 net income?
For the year ended December 31, 2018, Fidelity Engineering
reported pretax accounting income of $980,000. Selected information
for 2018 from Fidelity’s records follows:
Interest income on municipal bonds | $ | 32,600 |
Depreciation claimed on the 2018 tax return in excess of depreciation on the income statement |
55,900 | |
Carrying amount of depreciable assets in excess of their tax basis at year-end |
86,500 | |
Warranty expense reported on the income statement | 26,450 | |
Actual warranty expenditures in 2018 | 16,300 | |
Fidelity's income tax rate is 40%. At January 1, 2018, Fidelity's
records indicated balances of zero and $12,240 in its deferred tax
asset and deferred tax liability accounts, respectively.
Required:
1. Determine the amounts necessary to record
income taxes for 2018 and prepare the appropriate journal
entry.
2. What is Fidelity’s 2018 net income?