1.Jack & Jill Inc. acquired some manufacturing equipment in January 2018 for $400,000 and depreciated it $40,000 each year for three years on a straight-line basis. During 2021, the manufacturer announced a new technology for this type of equipment that will make the old models obsolete by the end of 2024. As a result, Jack & Jill will plan to replace the equipment at that time, effectively reducing the asset's life from ten to seven years. In its financial statements for 2021, Jack & Jill Inc. should:

A.None of these answer choices are correct

B.Report the book value of the equipment in its December 31, 2021 balance sheet at $210,000

C.Charge $280,000 in depreciation expense

D.Make an adjustment to retained earnings for the error in measuring depreciation during 2018-2020

2. In its first year of operations, Jack & Jill Inc. reported pretax accounting income of $500 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $60 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be increased under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be:

A.$20 million.

B.$18 million.

C.$24 million.

D.$21 million.

3. In January 1, 2021, Jack & Jills defined benefit pension plan had plan assets with a fair value of $400 million, and a PBO of $600 million. Service cost during 2021 was $96 million. Actual and expected return on plan assets were 8% and 10%, respectively. In addition:

Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2019 (amortization: $8 million per year)	$64 million
Net gain-pensions at Jan.1, 2021 (previous gains exceeded previous losses)	$80 million
Average remaining service life of the active employee group	10 years
Actuarys discount rate	8%

Pension expense for 2021 would be:

A. $118 million

B. $114 million

C. $122 million

D.$112 million

4. In 2021, internal auditors discovered that Jack & Jill Inc. had debited an expense account for the $700,000 cost of a machine purchased on January 1, 2018. The machine's useful life was expected to be seven years with no residual value. Straight-line depreciation is used by Jack & Jill. The journal entry to correct the error will include:

A.a debit to Equipment $400,000.

B.a debit to Retained earnings $400,000

C.a debit to Equipment $700,000.

D.a debit to Depreciation expense $300,000.