1. Isaac Inc. began operations in January 2018. For certain of its property sales, Isaac recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Isaac recognizes income when it collects cash from the buyer's installment payments. In 2018, Isaac had $670 million in sales of this type. Scheduled collections for these sales are as follows:

2018	$	81	million
2019		127	million
2020		127	million
2021		160	million
2022		175	million
	$	670	million

Assume that Isaac has a 26% income tax rate and that there were no other differences in income for financial statement and tax purposes. Suppose that, in 2019, legislation revised the income tax rates so that Isaac would be taxed in 2020 and beyond at 36%, rather than 26%. Assume that there were no other differences in income for financial statement and tax purposes. Ignoring operating expenses and additional sales in 2019, what deferred tax liability would Isaac report in its year-end 2019 balance sheet? (Round your answer to the nearest whole million.)

Multiple Choice

• $120 million.

• $166 million.

• $141 million.

• $241 million.

2. Dicker Furriers purchased 3,400 bonds of Loose Corporation on January 10, 2017, for $350 per bond and classified the investment as securities available for sale. Loose's market value was $200 per bond on December 31, 2017, and the decline in value was viewed as temporary. As of December 31, 2018, Dicker still owned the Loose bonds whose market value had declined to $120 per share. The decline is due to a reason that's judged to be other than temporary. Dicker's December 31, 2018, balance sheet and the 2018 income statement would show the following:

	Investment in Loose stock				Income statement loss on investments
a.		408,000				782,000
b.		408,000				272,000
c.		680,000				0
d.		1,190,000				782,000

rev: 01_15_2019_QC_CS-153413

Multiple Choice

• Option a

• Option d

• Option b

• Option c