1 Elan Ski Company uses the equity method to account for a 40% owned investment in shares. This would result in what type of difference and in what type of deferred income tax if Elans investee company reported an equity income of $100,000 for accounting purposes, but $110,0000 income was required to be reported for tax purposes?

Type of Difference Deferred Tax

a. Temporary Deductible Asset

b. Temporary Taxable Liability

c. Permanent Asset

d. Permanent Liability

2. At the end of 2019, its first year of operations, Blizzard Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:

Pretax accounting income $0

+/- temporary differences:

Estimated litigation expense 600,000

Instalment sales (750,000)

Taxable income $(150,000)

The estimated litigation expense will be deductible in 2020 when it is expected it will have to be paid. The instalment sales will be realized for tax in the amount of $250,000 in each of the next 3 years. The income tax rate is 30% for all years. The total income tax expense to be reported on the income statement is:

a. $0.

b. ($45,000).

c. $90,000.

d. $45,000.

e. $300,000.

3. Proto Inc. records an unrealized loss of ($4,000) on short-term securities. For tax purposes, no cash will be received until until the securtity is sold in 3 years. This would result in what type of difference and in what type of deferred income tax balance for Proto Inc.?

Type of Difference Deferred Tax

a. Permanent Liability

b. Permanent Asset

c. Temporary Taxable Liability

d. Temporary Deductible Asset

4. Given Mt. Cheam Ltd.s following data, how much tax would be reported under the taxes payable method for fiscal 2016?

	F2015	F2016	F2017
Income before tax	120,000	110,000	120,000
Taxable income	85,000	95,000	105,000
Tax rate	40%	25%	35%

a. 23,750.

b. 27,500.

c. 33,750.

d. 36,750.

Type or paste question here