1. How should future income tax liabilities/assets be presented on the balance statement?

a. As one net debit or credit amount

b. As reductions of the related asset or liability accounts

c. In two amounts: one for the net debit amount and one for the net credit amount

d. In two amounts: one for the net current amount and one for the net non-current amount

2. MoyCo. at the end of 20x1, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income$ 3,000,000

Advanced rentals500,000

Installment sales(200,000)

Taxable income$ 3,300,000

The gross profit from the installment sales will be realized next year. The advanced rentals of $500,000 will reverse equally over the next 2 years. The income tax rate is 30% for all years.

The deferred tax liability to be recognized is

a.$15,000.

b.$30,000.

c.$60,000.

d.$90,000.

The deferred tax asset--current to be recognized is

a.$0

b.$75,000

c.$60,000

d.$100,000

3. LCo.'s income statement for its first year of operations shows pretax income of $5,000,000. In

addition, the following differences existed between Lion's tax return and records:

Allowable for:Tax

Uncollectible accounts expense $250,000

Depreciation expense 880,000

Allowable for:Accounting

Uncollectible accounts expense $280,000

Depreciation expense 590,000

Tax-exempt interest revenue $50,000

LCo.'s current year tax rate is 30% and the enacted rate for future years is 40%. What amount should Lion report as a net deferral in its income statement for the year?

a. $148,000

b. $124,000

c. $104,000

d. $78,000