1.Which of the following regarding defined benefit pension plans is incorrect?

A.Prior service cost increases PBO.

B.The difference between pension plan assets and the PBO is equal to the funded status of the plan.

C.The projected benefit obligation may be less reliable than the accumulated benefit obligation.

D.An upward revision of the compensation trend would likely cause a gain in the pension benefit obligation.

2.At the end of 2017, Jack & Jill Inc. had a book-tax difference of $10 million in its contingent liability account due to an estimated loss from a law suit. There were no temporary differences prior to 2017. Jack & Jill earned taxable income $8 million during 2017 and the enacted tax rate was 40%. At the end of 2017, Jack & Jill believed that it was more likely than not that one half of the deferred tax asset will be realized.

Which of the following is correct?

A.There was an income tax benefit of $800,000 in 2017.

B.Income tax expense for 2017 was 3.2 million.

C.Income tax expense for 2017 was 1.2 million

D.Income tax expense for 2017 was 5.2 million.

3.

Jack & Jill Inc. had taxable income of $950,000 for the year ended December 31, 2020. The only temporary difference is accrued product warranty costs that are expected to be paid as follows:

2021	$150,000
2022	$70,000
2023	$50,000
2024	$120,000

Jack & Jill has never had any operating losses (book or tax) and does not expect any in the future. There were no temporary differences in prior years. The enacted tax rates are 35% for 2020 and 21% for 2021 through 2024.

Deferred tax associated with accrued product warranty reported in the December 31, 2020 balance sheet, and income tax expense for the year ended December 31, 2020 were_____________ and _________respectively.

A.deferred tax asset $97,500; income tax expense $140,000

B.deferred tax liability $81,900; income tax expense $319,400

C.deferred tax liability $97,500; income tax expense $335,000

D.deferred tax asset $81,900; income tax expense $155,600