Apila has the following information on income tax for 2001: income tax expense, $409; pretax income, $1,231; taxes payable, $257; net income, $876. Apila has an effective tax rate of:

a.

46.7%

b.

71.2%

c.

33.2%

d.

20.9%

Capital leases:

a.

Are recorded at amortized cost less gains & losses, which are recorded directly to stockholders equity

b.

Are recorded as rent expense monthly

c.

Transfer risks and rewards of ownership & recorded as both assets & liabilities

d.

Require off-balance-sheet reporting

1.Big Steel Co. has the following accounts:

Current assets

$10,000

Property, plant & equipment

$240,000

Less: accumulated depreciation

100,000

140,000

Total assets

$150,000

Gross profit

$95,000

Depreciation expense

$25,000

Tax expense

$10,000

Net income

$55,000

2.

The average age of fixed asset is estimated to be:

a.

3 years

b.

1 year

c.

4 years

d.

2 years

1.Given the information from Question 17, the average age % of fixed assets is:

a.

71.4%

b.

25.0%

c.

41.7%

d.

10.0%

Cooper Copper Co. uses straight-line depreciation for financial reporting and double declining balance for tax. Using straight line the company reports tax of $41,000; under double declining balance tax is $34,000. Cooper would record:

a.

Deferred tax liability of $7,000

b.

Taxes payable of $41,000

c.

Deferred tax asset of $34,000

d.

Deferred tax asset of $7,000

Ken Can Co. has the following tax information for this year:

Pretax income$72,000

Taxes payable$12,000

Income tax expense$19,000

Income tax paid$11,000

The reported effective tax rate is:

a.

26.4%

b.

57.9%

c.

16.7%

d.

15.3%

1.Given the information from20 above, what is the income tax paid rate for Ken Can?

a.

57.9%

b.

16.7%

c.

26.4%

d.

15.3%

1.Fly by Night Airways purchase or leases its entire aircraft fleet. Since Fly by Night already has too much debt, they would prefer off-balance-sheet financing, which can be achieved using:

a.

Using convertible bonds to buy all aircraft rather than leasing

b.

Operating leases

c.

Stock options

d.

Capital leases

Arrow Co. has a net income (after tax) of $1.5 million, a holding gain on marketable securities classified as held-to-maturity of $40,000, a foreign currency translation loss of (all-current method) of $90,000, and an income tax expense of $230,000. Arrow will report a comprehensive income of:

a.

$1,220,000

b.

$1,410,000

c.

$1,500,000

d.

$1,450,000

A major reason Enron used special purpose entities was:

a.

To increase working capital

b.

To increase pension plan funding levels

c.

To increase equity dilution

d.

Off-balance-sheet reporting

General Motors (Finance) had the following debt marketable securities for 2001 (in $ millions): trading securities=5,195; available-for-sale=5,195; held-to-maturity=371. Which of these are recorded at fair value.

a.

Trading securities

b.

Held-to-maturity & available-for-sale

c.

Trading securities & available-for-sale

d.

Held-to-maturity & trading securities

Any help would be great. Thank you in advance.