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:

Tendency

A predisposition to act or think in a particular way.

Decision-Making Process

The cognitive process leading to the selection of a course of action among variations.

New Learning Goals

Objectives set to acquire new knowledge or skills, often aimed at personal development or achieving higher competence in specific areas.

Prescribing

The act of authorizing and advising the use of medical treatments or drugs by a licensed healthcare professional.