During Its First Year of Operations Ending on December 31

question 20

Multiple Choice

During its first year of operations ending on December 31, 2016, the Dakota Company reported pretax accounting income of $600,000. The only difference between taxable income and accounting income was $80,000 of accrued warranty costs. These warranty costs are expected to be paid as follows: Assuming an income tax rate of 30% in 2016, what amount of income tax expense should Dakota report on its 2016 income statement?

• A) $175,000
• B) $180,000
• C) $185,000
• D) $204,000

---

Definitions:

Predisposition

An inclination or tendency to think, feel, or act in a particular way.

Unethical

Unethical refers to actions or behavior that violate moral principles or professional standards, often causing harm or unfair outcomes.

Moral Development

The process through which individuals grow in their understanding of moral concepts, including the differentiation between right and wrong.

Ethical Decisions

Choices made based on moral principles and values, aiming to do what is right and fair in a given situation, especially when faced with complex dilemmas.