1. Prasad Corporation is a calendar-year, accrual-method taxpayer. Prasad was formed and started its business activities on January 1, 2020. It reported the following information for 2020. Indicate Prasads deductible amount for 2020, if any, in each of the following alternative scenarios.

a. In April 2020, one of Prasads employees, Mr. Barnes, ran into a customer with a forklift, injuring the customer. The customer sued Prasad for $400,000. The case has not been settled but Prasad anticipates that it will lose the case and accrued a $400,000 expense on its financial statements.

b. On December 1, 2020, Prasad acquired equipment from Otero Company. As part of the purchase, Prasad signed a warranty agreement with Otero so that Otero would warranty the equipment for two years (December 1, 2020 - November 31, 2022). The cost of the warranty was $8,000. Prasad paid Otero for the warranty on February 3, 2021.

c. Prasad provides two-year warranties on products it sells to customers. For its 2020 sales, Prasad estimated and accrued $77,000 in warranty expense for financial accounting purposes. During 2020, Prasad spent $56,000 repairing its product under the warranty.

d. Prasad accrued an expense for $10,000 for amounts it anticipated it would be required to pay under the worker compensation act. During 2020, Prasad actually paid $8,000 for workers' compensationrelated liabilities.