Question

Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the cost is incurred. At December 31, 2013, Lance has a warranty liability of $2 million and taxable income of $40 million. At December 31, 2012, Lance reported a deferred tax asset of $737,500 related to this difference in reporting warranties, its only temporary difference. The enacted tax rate is 35% each year. How the deferred tax asset would be recorded in the journal entry to record the income tax provision for 2013? O Credit $37,500 O Debit $37,500 O Credit $32,500 O Debit $32,500

0 0
Add a comment Improve this question Transcribed image text
Answer #1

the defend tar asset shauld be キ400g00 ,135火 ance are Adi utment the balanee ?n he dejerred tox asset Iherelore , the ddlemed

Add a comment
Know the answer?
Add Answer to:
Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to...

    Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the cost is incurred. At December 31, 2018, Lance has a warranty liability of $2 million and taxable income of $80 million. At December 31, 2017, Lance reported a deferred tax asset of $837,000 related to this difference in reporting warranties, its only temporary difference. The enacted tax rate is...

  • Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to...

    Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2021, Lance has a warranty liability of $2 million and taxable income of $90 million. At December 31, 2020, Lance reported a deferred tax asset of $453,000 related to this difference in reporting warranties, its only temporary difference. The enacted tax rate...

  • Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to...

    Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2021, Lance has a warranty liability of $2 million and taxable income of $85 million. At December 31, 2020, Lance reported a deferred tax asset of $475,000 related to this difference in reporting warranties, its only temporary difference. The enacted tax rate...

  • Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to...

    Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2021, Lance has a warranty liability of $2 million and taxable income of $80 million. At December 31, 2020, Lance reported a deferred tax asset of $437,000 related to this difference in reporting warranties, its only temporary difference. The enacted tax rate...

  • Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to...

    Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the cost is incurred. At December 31, 2018, Lance has a warranty liability of $2 million and taxable income of $75 million. At December 31, 2017, Lance reported a deferred tax asset of $835,000 related to this difference in reporting warranties, its only temporary difference. The enacted tax rate is...

  • Southeast Airlines had pretax earnings of $80 million, Included in this amount is income from discontinued...

    Southeast Airlines had pretax earnings of $80 million, Included in this amount is income from discontinued operations of $20 million The company's tax rate is 25% 4.5 points What is the amount of income tax expense that Southeast would report in its income statement for continuing operations? (Enter your answer in millions rounded to 2 decimal place (l.e., Le., 5,500,000 should be entered as 5.50). Amount to be deducted should be indicated with a minus sign.) Income from continuing operations...

  • Knowledge Check 01 Exeter Corp. reports warranty expense by estimating the amount that eventually will be...

    Knowledge Check 01 Exeter Corp. reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when paid. During its first year of operations, Exeter reports pretax accounting income of $100,000. Its income statement includes a $50,000 warranty expense that is deducted for tax purposes when paid in Year 2 in the amount of $30,000 and Year 3 in the amount of $20,000. Exeter is...

  • question1 Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the...

    question1 Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2020–2023 are as follows: Service Revenue Collections Pretax Accounting Income 2020 $ 700,000 $ 660,000 $ 226,000 2021 790,000 818,000 300,000 2022 750,000 742,000 268,000...

  • Zygote Ltd. recorded warranty expense of $125,000 in 20X6, $35,000 in 20X7, and $75,000 in 20X8....

    Zygote Ltd. recorded warranty expense of $125,000 in 20X6, $35,000 in 20X7, and $75,000 in 20X8. Warranty claims paid were $70,000 in 20X6, $55,000 in 20X7, and $90,000 in 20X8. Warranty amounts are tax deductible when the cash is paid. Zygote's income tax rate is 28%. Required: For each 31 December 20X6 through 20X8, determine: (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign. Leave no cells blank - be certain to enter...

  • Shwonson Industries reported a deferred tax asset of $8.50 million for the year ended December 31,...

    Shwonson Industries reported a deferred tax asset of $8.50 million for the year ended December 31, 2020, related to a temporary difference of $34 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax asset will reduce taxable income. There are no other temporary differences in 2020-2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 15% beginning in...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT