Assume the following facts for RTY Corporation for Year 1. RTY recorded $2,300,000 of...
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Accounting
Assume the following facts for RTY Corporation for Year 1.
RTY recorded $2,300,000 of book income.
At the end of the year, RTY had accumulated depreciation for book purposes of $100,000 and accumulated depreciation for tax purposes of $150,000. As of the beginning of the year, the accumulated book and tax depreciation balances were $80,000 and $120,000,
RTY paid premiums for officer life insurance of $50,000
RTY established a warranty reserve of $15,000
RTYs reserve for obsolete inventory decreased from $37,500 to $19,500
Assume a statutory income tax rate of 25 percent
What are RTY's permanent items?
What are RTY's changes in temporary differences?
My question: Is obsolete inventory considered permanent item? Also, do you need to add it back $18,000 ($37,500-$19,500) since it decreased? TY!
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