Question
Minlows income statement included $130,000 accrued warranty expense that will be deducted for tax purposes when paid. On its Year 1 income tax return, Minlow
Minlows income statement included $130,000 accrued warranty expense that will be deducted for tax purposes when paid. On its Year 1 income tax return, Minlow reported depreciation of $700,000. For Year 1, Minlow reported depreciation of $225,000 in its income statement. Minlows enacted tax rates are 35% for Year 1 and Year 2, and 30% for Year 3 and Year 4. The depreciation difference and warranty difference will reverse over the next three years as follows:
These were Minlow's only temporary differences. In Minlow's Year 1 income statement, the deferred portion of its provision for income taxes should be:
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