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  1. business
  2. accounting
  3. assume the following facts for rty corporation for

Assume the following facts for RTY Corporation for Year 1. RTY recorded $2,300,000 of...

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Accounting

  1. Assume the following facts for RTY Corporation for Year 1.
  • RTY recorded $2,300,000 of book income.
  • At the end of the year, RTY had accumulated depreciation for book purposes of $100,000 and accumulated depreciation for tax purposes of $150,000. As of the beginning of the year, the accumulated book and tax depreciation balances were $80,000 and $120,000,
  • RTY paid premiums for officer life insurance of $50,000
  • RTY established a warranty reserve of $15,000
  • RTYs reserve for obsolete inventory decreased from $37,500 to $19,500
  • Assume a statutory income tax rate of 25 percent
  1. What are RTY's permanent items?
  2. What are RTY's changes in temporary differences?

My question: Is obsolete inventory considered permanent item? Also, do you need to add it back $18,000 ($37,500-$19,500) since it decreased? TY!

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