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Blossom Company began operations at the beginning of 2021. The following information pertains to this company. 1. 2. 3. Pretax financial income for 2021 is
Blossom Company began operations at the beginning of 2021. The following information pertains to this company. 1. 2. 3. Pretax financial income for 2021 is $111.000. The tax rate enacted for 2021 and future years is 20%. Differences between the 2021 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $7,300. Warranty deductions per the tax return amount to $2,200. (b) Gross profit on construction contracts using the percentage-of-completion method per books amounts to $90,100. Gross profit on construction contracts for tax purposes amounts to $65,300. (c) Depreciation of property, plant, and equipment for financial reporting purposes amounts to $61,800. Depreciation of these assets amounts to $76,700 for the tax return. (d) A $3,400 fine paid for violation of pollution laws was deducted in computing pretax financial income. (e) Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,300. 4 Taxable income is expected for the next few years. (Assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.) (a) Your answer is correct. Compute taxable income for 2021. Taxable income for 2021 $ 78500 Taxable income for 2021 $ 78500 eTextbook and Media List of Accounts Attempts: 1 of 2 used Using multiple attempts will impact your score. 5% score reduction after attempt 1 (b) * Your answer is incorrect. Compute the deferred taxes at December 31, 2021, that relate to the temporary differences described above. Deferred tax liability $ $ 1020 Deferred tax asset $ $ 7940
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