A company estimates its warranty liability at the beginning of 20X1 to be $100,000 and the warranty liability at the end of the year to be $110,000 on a generally accepted accounting principles (GAAP) baisis. The company actually paid $20,000 cash in warranty claims during the year. The companys tax rate is 20%. How much of the warranty expense is deductible for tax purposes in 20X1?

S4,000

$20,000

$22,000

$30,000

A financial reporting manager is discussing accounting errors with a new accounting intern.

Which piece of advice should the manager share with this intern?

A change in accounting estimate is treated as an error.

Accounting errors should be noted during the year and corrected at the end.

Accounting errors can be material or immaterial.

The retained earnings account should not be used to correct prior errors.