7. At December 31, 2020, the Heather Corporation reported a $20,000 deferred tax liability pertaining to a $50,000 temporary difference that will reverse equally during the next four years. On December 31, 2020, after determining the deferred tax liability, Heathers management was informed that the income tax rate for years subsequent to 2020 had been changed to 44%. As a result of the tax rate change, Heathers 2020 income tax expense will:

a.not change.

b.increase $800.

c.increase $1,200.

d.increase $2,000.

e.Cannot be determined

8. If it is more likely than not that future benefits from a deferred tax asset will not be realized in its entirety, a/an

a.loss is recorded

b.valuation allowance is established.

c.expense allowance is established.

d.equity account is increased.

e.liability is created

9. Which of the following was not a change enacted by the Tax Cuts and Jobs Act of 2017?

a. The corporate tax rate was lowered from 35% to 21%.

b. The option to carry back net operating losses was extended to five years.

c. Bonus depreciation was expanded by eliminating the requirement that items be new to qualify.

d. The domestic production activities deduction was repealed.

e. All of these are changes enacted by the Tax Cuts and Jobs Act of 2017.

10.Which of the following statements does not correctly describe required income tax disclosures in the notes to the financial statements?

a. The sources that created deferred tax assets and deferred tax liabilities is a required disclosure.

b. The statutory tax rate and the effective tax rate are disclosed.

c. The effective tax rate applicable to firms in the same industry is a required disclosure.

d. The current and deferred portions of the current periods income tax provision must be disclosed separately.