88. Khan, Inc. reports a taxable and financial loss of $1,950,000 for 2015. Its pretax financial income for the last two years was as follows:

2013 $900,000

2014 1,200,000

The amount that Khan, Inc. reports as a net loss for financial reporting purposes in 2015, assuming that it uses the carryback provisions, and that the tax rate is 30% for all periods affected, is

a. $1,950,000 loss.

b. $ -0-.

c. $585,000 loss.

d. $1,365,000 loss

why choose D

Duncan Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Profits of $600,000 recognized for books in 2014 will be collected in the following years:

Collection of Profits

2015 $100,000

2016 $200,000

2017 $300,000

The enacted tax rates are: 40% for 2014, 35% for 2015, and 30% for 2016 and 2017. Taxable income is expected in all future years. What amount should be included in the December 31, 2014, balance sheet for the deferred tax liability related to the above temporary difference?

a. $ 35,000

b. $150,000

c. $185,000

d. $240,000

why choose C