Sherrod, Incorporated, reported pretax accounting income of $ million for The following information relates to differences between pretax accounting income and taxable income:
Income from installment sales of properties included in pretax accounting income in exceeded that reported for tax purposes by $ million. The installment receivable account at yearend had a balance of $ million representing portions of and installment sales expected to be collected equally in and
Sherrod was assessed a penalty of $ million by the Environmental Protection Agency for violation of a federal law in The fine is to be paid in equal amounts in and
Sherrod rents its operating facilities but owns one asset acquired in at a cost of $ million. Depreciation is reported by the straightline method, assuming a fouryear useful life. On the tax return, deductions for depreciation will be more than straightline depreciation the first two years but less than straightline depreciation the next two years $ in millions:
Income Statement Tax Return Difference
$ $ $
$ $ $
For tax purposes, warranty expense is deducted when costs are paid. The balance of the warranty liability was $ million at the end of Warranty expense of $ million is recognized in the income statement in $ million of cost is paid in and another $ million of costs are anticipated to be paid in At December the warranty liability is $ million after adjusting entries
In Sherrod accrued an expense and related liability for estimated paid future absences of $ million relating to the companys new paid vacation program. Future compensation will be deductible on the tax return when actually paid during the next two years $ million in ; $ million in
During accounting income included an estimated loss of $ million from having accrued a loss contingency. The loss is paid in at which time it is tax deductible.
Balances in the deferred tax asset and deferred tax liability accounts at January were $ million and $ million, respectively. The enacted tax rate is each year.
