Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can i please get the best answer to each question and show working so i know how to go about answering the questions Multiple Choice:
Can i please get the best answer to each question and show working so i know how to go about answering the questions
Multiple Choice: 1) All of the following involve a temporary difference for purposes of income tax allocation except: a) Product warranty expenses b) Life insurance proceeds c) MACRS depreciation for tax purposes & straight line for accounting purposes d) gross profit on installment sales for tax purposes 2) Which of the following transactions would result in the creation of a taxable temporary difference? a) Environmental clean up costs that are expensed when probable in pretax financial income but when the clean up costs are paid for tax purposes b) Subscription revenue received in advance that is recognized when received for tax purposes but when earned in pretax financial income c) Bad debt expense that is recorded on the allowance method in pretax financial income but on the direct write off method for tax purposes d) Gross profit recognized on the full accrual basis in pretax financial income but on the installment method for tax purposes 3) Austin Corporation had recorded a deferred tax liability of $240,000 at the end of 2014 based on taxable temporary differences and reflecting then enacted tax rate of 30%. In February 2015, due to budget constraints, Congress enacted new income tax rate of 35% for 2015 and future years. The journal entry required to adjust the deferred tax liability account in February 2015 would be: a) No entry necessary as the tax rate when the liability originated was 30% b) Dr Income Tax Expense 12,000 Cr Deferred Tax Liability 12,000 c) Dr Loss on change in tax rate 40,000 Cr Deferred Tax Liability 40,000 d) Dr Income Tax Expense 40,000 Cr Deferred Tax Liability 40,000 4) In accordance with intraperiod tax allocation, each of the following items is shown net of tax except: a) b) c) d) Extraordinary gains and losses Discontinued operations Gain on sale of an investment Other comprehensive income 5) The company has the following balances in its deferred tax asset and liability accounts at the end of 2014. Each tax asset or liability is related to a specific asset or liability account that gave rise to it. Account Balance Related Asset or Liability Deferred Tax Asset $12,800 Accounts Receivable-current Deferred Tax Asset $9,200 Pension liability-non current Deferred Tax Liability $5,000 Inventory-current Deferred Tax Liability $14,600 Property, Plant and equipment-non current These deferred tax assets and liabilities would be reported on the balance sheet at the end of 2014 in the following sections of a classified balance sheet: a) b) c) d) Current Assets $7,800; Non current Liabilities $5,400 Current Assets $22,000; Current Liabilities $19,600 Non current Assets $22,000; Non current Liabilities $19,600 Current Assets $12,800; Non current Assets $9,200; Current Liabilities $5,000; Non current Liabilities $14,600 6) US GAAP and IFRS accounting principles for defined benefit pension plans differ in a number of ways. The differences include: a) Components of pension expense are reported as part of different line items in the income statement under IFRS but not under US GAAP b) Unrecognized gains and losses are amortized following a corridor approach under US GAAP, but they are recognized in full in OCI with no recycling under IFRS c) Prior service cost must be expensed when granted under IFRS but is amortized under US GAAP d) All of the above e) Only (b) and (c) above 7) Which of the following statements is (are) true regarding a defined benefit pension plan? a) The level of benefits to be received by the employee in retirement is defined in the plan b) It is generally easier to account for a defined benefit plan than a defined contribution plan c) The contribution amount that must be paid to the plan is defined in the plan d) Employers that use defined benefit plans are assuming more risks than employers that use defined contribution plans e) (a) and (d) above 8) The McMurry Company offers employees a defined contribution pension plan. In 2014, McMurry contributed $150,000 to the plan, which paid benefits of $190,000 to retired employees. The entry to record pension expense for 2014 would include: a) A credit to an accrued pension liability of $40,000 b) A debit to pension expense of $150,000 c) A debit to pension expense of $190,000 d) A debit to OCI to reflect an actuarial loss of $40,000 which will be amortized to pension expense in any year it exceeds the corridor 9) On January 1, 2014, a company had $90,000 of unrecognized prior service cost. The years-of-future service method of amortization is used. The company has five employees, as indicated below: Employee Expected Years of Future Service A 1 B 2 C 4 D 5 E 6 What amount of prior service cost should be included in pension expense for 2015? a) $20,000 b) $18,000 c) $15,000 d) $10,000 10) Given the following information: Beginning of 2014 2015 Projected Benefit Obligation $120,000 $140,000 Plan Asset Value $80,000 $100,000 Average remaining service life = 5 years An unrecognized net loss existed at the beginning of 2014 in the amount of $40,000. An additional unrecognized net loss of $10,000 is reported by actuaries as of the end of 2014. What amount of loss should be added to pension expense in 2014? a) b) c) d) $5,600 $8,000 $9,200 $9,600 11) Austin Company provides an other postretirement benefit plan to its employees. Data relating to the plan for the year are: Service cost $80,000 Accum Postretirement Benefit Obligation Including ($200k of prior service cost) $400,000 Discount Rate 5% Average remaining service life to eligibility 10 years Payments made to retirees during the year $12,000 What is the expense for the other postretirement benefits plan for the year? a) $80,000 b) $108,000 c) $120,000 d) $128,000 e) $140,000 12) Which of the following should be disclosed in a Summary of Significant Accounting Policies? a) b) c) d) Composition of the ending balance of fixed assets Depreciation method followed Contingencies associated with lawsuits against the company Reconciliation of changes in the projected benefit obligation for the year 13) The method the FASB used to determine what information is to be reported for business segments is referred to as the: a) b) c) d) Business model approach Operating approach Management approach Segment approach 14) The following information relates to the Hico Corporation: Op Segment A B C D Revenues $120 $420 $580 $100 Segment Assets $700 $2000 $4300 $400 Profit (Loss) $6 ($20) ($100) $14 a) b) c) d) Which of the segments are reportable? B and C B and D B, C and D A, B, C and DStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started