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:

Systematic Research Methods

Organized, structured approaches employed in investigation or study to establish facts or principles.

Conceptual Anchors

Ideas or principles that are used as a reference point to understand or make sense of something new or complex.

Telecommuting

The practice of working from a remote location outside of corporate offices, typically from home, using digital communication tools.

Employee Stress

The mental, emotional, and physical strain experienced by workers, often caused by pressures or demands in the workplace.