Ranger Athletic Equipment Uses the Accrual Method and Reports on a Calendar

question 117

Essay

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?

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Definitions:

Developing Organism

An organism in the process of growth and development, from conception until maturity.

Prenatal Exposure

Refers to the exposure of a developing fetus to substances, conditions, or influences while in the womb, which can impact health outcomes.

Maternal Exposure

The contact or experience of a mother with potentially harmful substances, conditions, or stressors during pregnancy that may affect fetal development.

Neurological Deficits

Refers to temporary or permanent impairments of the nervous system functions, affecting areas such as movement, sensation, or cognitive abilities.