QUESTION 12

Pretax accounting income for the year ended December 31, 2009, was $50 million for Truffles Company. Truffles' taxable income was $60 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 30% for 2009 and 40% thereafter. What amount should Truffles report as thecurrentportion of income tax expense for 2009?

a. $15 million

b. $18 million

c. $20 million

d. $24 million

QUESTION 14

The effect of a change in tax rates:

a. Results in a prior period adjustment.

b. Is allocated between discontinued operations and continuing operations.

c. Is reported separately after extraordinary items.

d. Is reflected in income from continuing operations.

QUESTION 20

An overfunded pension plan means that the:

a. PBO is less than plan assets.

b. PBO exceeds plan assets.

c. ABO is less than plan assets.

d. ABO exceeds plan assets.

QUESTION 23

Interest cost is calculated by multiplying the:

a. ABO by the expected return on the plan assets.

b. ABO by the discount rate.

c. PBO by the expected return on plan assets.

d. PBO by the discount rate.

QUESTION 26

Which of the following is true?

a. A projected benefits approach is used to determine the periodic pension expense.

b. An accumulated benefits approach is used to determine the periodic pension expense.

c. A vested benefits approach is used to determine the periodic pension expense.

d. The pension expense is unrelated to the pension obligation.

QUESTION 28

When accounting for pensions, delayed recognition of gains and losses in earnings achieves:

a. Income averaging.

b. Expense averaging.

c. Income optimization.

d. Income smoothing.

QUESTION 42

In 2007, Winn, Inc. issued $1 par value common stock for $35 per share. No other common stock transactions occurred until July 31, 2009, when Winn acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?

a. 2009 net income is decreased.

b. Additional paid-in capital is decreased.

c. 2009 net income is increased.

d. Retained earnings is increased.

QUESTION 45

When treasury shares are sold at a price above cost:

a. A gain account is credited.

b. A loss is reported.

c. A revenue account is credited.

d. Paid-in capital is increased.