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You have been hired as a consultant to advise on how to present the tax differences between books and tax returns

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Question;You have been hired as a consultant to advise on how to present;the tax differences between books and tax returns on the balance sheet of RFH company.;There are a few questionable items which the current controller Mary Sims is;confused as to proper presentation. The timing differences are;1) $1,5000,000 as a result of depreciation timing difference;(books S-L versus MACRS tax return).;2) There also was a bad debt reserve increase from the prior;year of $250,000.;RFH Company is a manufacturing company who accrued $300,000;in warranty liability at year-end and could not deduct it on the tax return for;this year but warranty will be paid out in the following year. A lawsuit in the;amount of $450,000 was accrued on the books at year-end awaiting the final;legal court judgment. Prior court cases have ruled that this $500,000 can be;paid evenly over 3 years. You have to write a memo to Mary Sims advising her;how to classify these temporary tax differences on her books at year-end. In;your memo give FASB sources for her that validates your balance sheet;presentation.

 

Paper#44262 | Written in 18-Jul-2015

Price : $22
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