1.Which of the following represents a future deductible amount?

A.Installment sales; revenue recorded for tax purposes when cash is received.

B.Accrued expense for employee vacation days not taken yet; tax deductible when employee takes vacation days in the future.

C.Prepaid rent; tax deductible when paid.

D.Straight-line depreciation for financial reporting; MARCS for tax purposes.

2.Jack & Jill Inc. leased salon equipment under a five-year lease with an option to renew for three years at the end of five years and an option to renew for an additional three years at the end of eight years. The first three-year renewal option can be exercised for one-half the original and usual rate. What is the length of the lease term that Jack & Jill should assume in recording the transactions related to the lease?

A.cannot be determined

B.8 years

C.5 years

D.11 years

3.

At the beginning of the year, Jack & Jill Inc.s Deferred tax asset and Deferred tax liability balances were $3,000 and $5,000, respectively. At the end of the year, Jack & Jills analysis of book-tax differences indicated that future deductible amount and future taxable amount were $8,000 and $11,000, respectively. Jack & Jill earned taxable income $100,000 during the year. Assume the enacted tax rate is 25%, income tax expense for the year would be:

A.$23,750

B.$26,000

C.$24,500

D.$39,600

4.On January 1, 2021, Jack & Jill Inc. leased a new machine from Georgia Co. The following information pertains to the lease:

Lease term	5 years
Annual rental payable at beginning of each year	$65,000
Useful life of machine	7 years
Implicit interest rate in lease (known by Jack & Jill)	10%

The cost of the machine on Georgias accounting records is $253,478. It is customized for Jack and Jills use with no alternative use to Georgia at the end of the lease term.

Which of the following is correct regarding Georgias (the lessors) accounting?

A. At the beginning of the lease term, Georgia should derecognize the lease asset at $271,042.

B.Georgia should record total interest revenue of $27,104 for 2021.

C.Because the lease term does not cover the major part of the machines remaining useful life, Georgia should record depreciation expense.

D.At the beginning of the lease term, Georgia should derecognize the lease asset at $253,478.

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