Reference no: EM132962680
Sandhill Co. at the end of 2021, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:
Pretax financial income $ 850,000
Estimated warranty expenses deductible for taxes when paid $1,300,000
Extra depreciation $(1,680,000)
Taxable income$ 470,000
Estimated warranty expense of $750,000 will be deductible in 2022, $400,000 in 2023, and $150,000 in 2024. The use of the depreciable assets will result in taxable amounts of $560,000 in each of the next three years.
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