Ranger Athletic Equipment uses the accrual method and reports on a calendar year. Ranger provides two-year warranties on all sales of equipment. This year Ranger estimated warranty expense for book purposes, and he accrued $1 million of warranty expenses. However, during the year Ranger only spent $400,000 repairing equipment under the warranty. What can Ranger deduct for warranty expense on the tax return for this year?
What will be an ideal response?
$400,000
The accrued $1 million warranty expense is an estimate and warranty expense is a service that can be deducted only when provided or the cost is incurred. Hence, Ranger is allowed to deduct the $400,000 spent repairing equipment under the warranty.
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Which of the following are considered to be mandatory information required by a regulatory body?
A. The cost to build an all-new Starbucks restaurant in Abu Dhabi. B. The amount of taxes saved by a merger. C. The total dollar value of fireworks that are sold on July 4. D. Financial reports for the Securities and Exchange Commission.
How is penetration pricing different from skimming pricing?
What will be an ideal response?
Palmer Company has $5,000,000 of 15-year maturity bonds outstanding. Each bond has a maturity value of $1,000, an annual coupon of 12.0%. The bonds can be called at any time with a premium of $50 per bond. If the bonds are called, the company must pay flotation costs of $10 per new refunding bond. Ignore tax considerations?assume that the firm's tax rate is zero.The company's decision of whether to call the bonds depends critically on the current interest rate on newly issued bonds. What is the breakeven interest rate, the rate below which it would be profitable to call in the bonds?
A. 9.57% B. 10.07% C. 10.60% D. 11.16% E. 11.72%
The law gives which of the following person(s) an absolute privilege to say anything (including false defamatory statements) about other persons without liability for damages?
a. any close personal friend who advises another about the character of a prospective suitor b. any state or federal legislator who makes the statement during legislative proceedings c. any doctor in discussing patients with other doctors d. any lawyer in discussing clients with other lawyers