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The pre-tax income statements for Moonstone Ltd. for two years (summarized) were as follows: 20X8 20X9 Revenues $ 268,000 $ 332,000 Expenses 182,000 238,000 Pre-tax
The pre-tax income statements for Moonstone Ltd. for two years (summarized) were as follows:
20X8 | 20X9 | ||||||
Revenues | $ | 268,000 | $ | 332,000 | |||
Expenses | 182,000 | 238,000 | |||||
Pre-tax income | $ | 86,000 | $ | 94,000 | |||
For tax purposes, the following income tax differences existed:
- Revenues on the 20X9 statement of profit and loss include $38,000 rent, which is taxable in 20X8 but was unearned at the end of 20X8 for accounting purposes.
- Expenses on the 20X9 statement of profit and loss include political contributions of $13,000, which are not deductible for income tax purposes.
- Expenses on the 20X8 statement of profit and loss include $21,000 of estimated warranty costs, which are not deductible for income tax purposes until 20X9.
Required: 1. What was the accounting carrying value and tax basis for unearned revenue and the warranty liability at the end of 20X8 and 20X9?
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