BA 300-Which of the following differences between financial

1.

Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax liability?

2.

For its first year of operations, Demich Corporation's reconciliation of pretax accounting income to taxable income is as follows:

Demich's tax rate is 40%. Assume that no estimated taxes have been paid.

What should Demich report as income tax payable for its first year of operations?

3.

Carlock Inc. began operations in January 2016. For certain of its property sales, Carock recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Carlock recognizes income when it collects cash from the buyer's installment payments.

In 2016, Carlock had $600 million in sales of this type. Scheduled collections for these sales are as follows:

Assume that Carlock has a 30% income tax rate and that there were no other differences in income for financial statement and tax purposes.

Ignoring operating expenses and additional sales in 2017, what deferred tax liability would Carlock report in its year-end 2017 balance sheet?

4.

Which of the following statements is true as to GAAP regarding accounting for income taxes, and its use of the asset and liability approach?

5.

Budget Inc. had $300 million in taxable income for the current year. Budget also had a decrease in deferred tax assets of $30 million and an increase in deferred tax liabilities of $60 million. The company is subject to a tax rate of 40%. The total income tax expense for the year was:

A.

$90 million.

B.

$100 million.

C.

$110 million.

D.

$130 million.

7.

Information for Kent Corp. for the year 2016:

Reconciliation of pretax accounting income and taxable income:

Cumulative future taxable amounts all from depreciation temporary differences:

The enacted tax rate was 30% for 2015 and thereafter.

What would Kent's income tax expense be in the year 2016?

8.

Of the following temporary differences, which one ordinarily creates a deferred tax asset?

9.

In reconciling net income to taxable income, interest earned on municipal bonds is:

10.

Which of the following would never require reporting deferred tax assets or deferred tax liabilities?

11.

Pretax accounting income for the year ended December 31, 2016, was $50 million for Truffles Company. Truffles' taxable income was $60 million. This was a result of differences between straight-line depreciation for financial reporting purposes and MACRS for tax purposes. The enacted tax rate is 30% for 2016 and 40% thereafter. What amount should Truffles report as the current portion of income tax expense for 2016?

A.

Results in a prior period adjustment.

B.

Is allocated between discontinued operations and continuing operations.

C.

Is reported separately after discontinued operations.

D.

Is reflected in income from continuing operations.

13.

The employer has an obligation to provide future benefits for:

14.

Consider the following:

I. Present value of vested benefits at present pay levels.
II. Present value of nonvested benefits at present pay levels.
III. Present value of additional benefits related to projected pay increases.

Which of the above constitutes the accumulated benefit obligation?

15.

The PBO is increased by:

16.

A company's defined benefit pension plan had a PBO of $265,000 on January 1, 2016. During 2016, pension benefits paid were $40,000. The discount rate for the plan for this year was 10%. Service cost for 2016 was $80,000. Plan assets (fair value) increased during the year by $45,000. The amount of the PBO at December 31, 2016, was:

17.

An underfunded pension plan means that the:

18.

Data for 2016 were as follows: PBO, January 1, $240,000 and December 31, $270,000; pension plan assets (fair value) January 1, $180,000, and December 31, $230,000. The projected benefit obligation was underfunded at the end of 2016 by:

19.

Pension gains related to plan assets occur when:

20.

Fox Company received the following reports of its defined benefit pension plan for the current calendar year:

The long-term expected rate of return on plan assets is 8%. Assuming no other data are relevant, what is the pension expense for the year?

21.

Gains and losses can occur with pension plans when:

22.

Payment of retirement benefits:

23.

Interest cost is calculated by multiplying the:

24.

The three components of pension expense that are present most often are:

25.

The pension expense includes periodic changes that occur: