Please see below 25 questions. Work DOES NOT need to be shown. Thank you!

1. For the current year ($ in millions), Centipede Corp. had $76 in pretax accounting income. This included warranty expense of $8 and $12 in depreciation expense. 1 million of warranty costs were incurred, and MACRS depreciation amounted to $35. In the absence of other temporary or permanent differences, what was Centipede's income tax payable currently, assuming a tax rate of 40%?

2. Red Co. recorded a right-of-use asset of $170,000 in a 10-yearType A lease. Payments of $27,667 are made annually at the end of each year. The interest rate charged by the lessor was 10%. Under the new ASU, the balance in the lease payable after two years will be:

3.

Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2016. The manufacturing cost of the computers was $18 million.

This non-cancelable lease had the following terms:

	Lease payments: $2,819,901 semiannually; first payment at January 1, 2016; remaining payments at June 30 and December 31 each year through June 30, 2020.
	Lease term: 5 years (10 semi-annual payments).
	No residual value; no bargain purchase option.
	Economic life of equipment: 5 years.
	Implicit interest rate and lessee's incremental borrowing rate: 6% semi-annually.
	Fair value of the computers at January 1, 2016: $22 million.

Collectibility of the rental payments is reasonably assured, and there are no lessor costs yet to be incurred.

What is the interest revenue that Technoid would report on this lease in its 2016 income statement? (Round your answer to the nearest dollar.)

4.

Information for Kent Corp. for the year 2016:

Reconciliation of pretax accounting income and taxable income:

Pretax accounting income	$179,600
Permanent differences	(16,000)
	163,600
Temporary difference-depreciation	(11,200)
Taxable income	$152,400

Cumulative future taxable amounts all from depreciation temporary differences:

As of December 31, 2015 $13,900

As of December 31, 2016 $25,100

The enacted tax rate was 28% for 2015 and thereafter.

What should be the balance in Kent's deferred tax liability account as of December 31, 2016?

5.

In 2016, Bodily Corporation reported $220,000 pretax accounting income. The income tax rate for that year was 26%. Bodily had an unused $125,000 net operating loss carryforward from 2014 when the tax rate was 32%. Bodily's income tax payable for 2016 would be

6.

On January 1, 2016, Gibson Corporation entered into a four-year operating lease. The payments were as follows: $25,000 for 2016, $21,000 for 2017, $17,500 for 2018, and $13,500 for 2019. What is the correct amount of lease expense for 2017?

7.

Bumble Bee Co. had taxable income of $7,000, MACRS depreciation of $5,000, book depreciation of $2,000, and accrued warranty expense of $400 on the books although no warranty work was performed. What is Bumble Bee's pretax accounting income?

8.

Warren Co. recorded a right-of-use asset of $850,000 in a 10-year Type A lease. The interest rate charged by the lessor was 10%. Under the new ASU, the balance in the right-of-use asset after 2 years will be:

9.

Woody Corp. had taxable income of $7,850 in the current year. The amount of MACRS depreciation was $2,975, while the amount of depreciation reported in the income statement was $1,025. Assuming no other differences between tax and accounting income, Woody's pretax accounting income was:

10.

On January 1, 2016, Packard Corporation leased equipment to Hewlitt Company. The lease term is 8 years. The first payment of $455,000 was made on January 1, 2016. Remaining payments are made on December 31 each year, beginning with December 31, 2016. The equipment cost Packard Corporation $2,505,000. The present value of the minimum lease payments is $2,745,000. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 9%, what will be the balance reported as a liability by Hewlitt in the December 31, 2017, balance sheet? (Round final answer to the nearest dollar.)

11.

During the current year, Stern Company had pretax accounting income of $43 million. Stern's only temporary difference for the year was rent received for the following year in the amount of $10 million. Stern's taxable income for the year would be:

12.

Information for Kent Corp. for the year 2016:

Reconciliation of pretax accounting income and taxable income:

Pretax accounting income	$179,800
Permanent differences	(16,300)
	163,500
Temporary difference-depreciation	(13,400)
Taxable income	$150,100

Cumulative future taxable amounts all from depreciation temporary differences:

As of December 31, 2015 $14,300

As of December 31, 2016 $27,700

The enacted tax rate was 26% for 2015 and thereafter.

What should Kent report as the current portion of its income tax expense in the year 2016?

13.

The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $153,000 at December 31, 2016. This was a result of differences between straight-line depreciation for financial reporting purposes and MACRS for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 30% for 2016 and 38% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2016, balance sheet as:

14.

XYZ Company leased equipment to West Corporation under a lease agreement that qualifies as a capital lease to West but not as a result of a bargain purchase option or a title transfer. The present value of the asset is $660,000. The expected economic life of the asset is 10 years. The lease term is five years. Using the straight-line method, what would West record as annual depreciation?

15.

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the inception of the lease. Title does not transfer to the lessee and there is no bargain purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.

Payment	Cash Payment	Effective Interest	Decrease in balance	Balance
				71,908
1	11,000		11,000	60,908
2	11,000	6,700	4,300	56,607
3	11,000	6,227	4,773	51,834
4	11,000	5,702	5,298	46,536
5	11,000	5,119	5,881	40,655
6	11,000	4,472	6,528	34,127
7	11,000	3,754	7,246	26,881
8	11,000	2,957	8,043	18,838
9	11,000	?	?	?
10	11,000	?	?	?

What would be the outstanding balance after payment #10?

16.

Giada Foods reported $840 million in income before income taxes for 2016, its first year of operations. Tax depreciation exceeded depreciation for financial reporting purposes by $50 million. The company also had non-tax-deductible expenses of $40 million relating to permanent differences. The income tax rate for 2016 was 35%, but the enacted rate for years after 2016 is 40%. The balance in the deferred tax liability in the December 31, 2016, balance sheet is:

17.

ABC Company leased equipment to Best Corporation under a lease agreement that qualifies as a direct financing lease. The cost of the asset is $123,000. The lease contains a bargain purchase option that is effective at the end of the fifth year. The expected economic life of the asset is 10 years. The lease term is five years. The asset is expected to have a residual value of $2,700 at the end of 10 years. Using the straight-line method, what would Best record as annual depreciation?

18.

On January 1, 2016, Calloway Company leased a machine to Zone Corporation. The lease qualifies as a direct financing lease. Calloway paid $240,000 for the machine and is leasing it to Zone for $33,000 per year, an amount that will return 11% to Calloway. The present value of the minimum lease payments is $240,000. The lease payments are due each January 1, beginning in 2016. What is the appropriate interest entry on December 31, 2016?

19.

On December 31, 2016, Perry Corporation leased equipment to Admiral Company for a five-year period. The annual lease payment, excluding executory costs is $50,000. The interest rate for this lease is 14%. The payments are due on December 31 of each year. The first payment was made on December 31, 2016. The normal cash price for this type of equipment is $140,000 while the cost to Perry was $119,000. For the year ended December 31, 2016, by what amount will Perry's pretax earnings increase from this lease?

20.

Pretax accounting income for the year ended December 31, 2016, was $44 million for Truffles Company. Truffles' taxable income was $58 million. This was a result of differences between straight-line depreciation for financial reporting purposes and MACRS for tax purposes. The enacted tax rate is 28% for 2016 and 38% thereafter. What amount should Truffles report as the current portion of income tax expense for 2016? (Round your answer to the nearest whole million.)

21.

On January 1, 2016, Wellburn Corporation leased an asset from Tabitha Company. The asset originally cost Tabitha $430,000. The lease agreement is an operating lease that calls for four annual payments beginning on January 1, 2016, in the amount of $42,000. The other three remaining payments will be made on January 1 of each subsequent year. Which of the following journal entries should Tabitha record on January 1, 2016?

22.

The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars):

Pretax accounting income:	$210
Pretax accounting income included:
Overweight fines (not deductible for tax purposes)	4
Depreciation expense	63
Depreciation in the tax return using MACRS:	106

The applicable tax rate is 37%. There are no other temporary or permanent differences.

Franklin's taxable income ($ in millions) is:

23.

On February 1, 2016, Pearson Corporation became the lessee of equipment under a five-year, noncancelable lease. The estimated economic life of the equipment is eight years. The fair value of the equipment was $740,000. The lease does not meet the definition of a capital lease in terms of a bargain purchase option, transfer of title, or the lease term. However, Pearson must classify this as a capital lease if the present value of the minimum lease payments is at least

24.

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows:

Pretax accounting income	$210,000
Permanent difference	(15,400)
	194,600
Temporary difference-depreciation	(20,800)
Taxable income	$173,800

Tringali's tax rate is 35%.

What should Tringali report as its income tax expense for its first year of operations?

25.

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows:

Pretax accounting income	$380,000
Permanent difference	(14,200)
	365,800
Temporary difference-depreciation	(19,300)
Taxable income	$346,500

Tringali's tax rate is 35%. Assume that no estimated taxes have been paid.

What should Tringali report as income tax payable for its first year of operations?