Problem
BCS Corporation is a calendar-year, accrual- method taxpayer. BCS was formed and started its business activities on January 1 of this year. It reported the following information for the year.
Indicate BCS's deductible amount for this year in each of the following alternative scenarios.
BCS provides two-years warranties on products it sells to customers. For its current-year sales, BCS estimated and accrued $200,000 in warranty expense for financial accounting purposes. During this year, BCS actually spent $30,000 repairing its product under the warranty.