Use the following information for questions 1 and 2. At the beginning of 2013, Pitman Co. purchased an asset for $900,000 with an estimated useful life of 5 years and an estimated salvage value of $75,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.s tax rate is 40% for 2013 and all future years. 1. At the end of 2013, what are the book basis and the tax basis of the asset? Book basis Tax basis a. $660,000 $465,000 b. $735,000 $465,000 c. $735,000 $540,000 d. $660,000 $540,000 2. At the end of 2013, which of the following deferred tax accounts and balances is reported on Pitmans balance sheet? Account _ Balance a. Deferred tax asset $78,000 b. Deferred tax liability $78,000 c. Deferred tax asset $117,000 d. Deferred tax liability $117,000 3. Lehman Corporation purchased a machine on January 2, 2011, for $2,000,000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes: 2011 $400,000 2014 $230,000 2012 640,000 2015 230,000 2013 384,000 2016 116,000 Assuming an income tax rate of 30% for all years, the net deferred tax liability that should be reflected on Lehman's balance sheet at December 31, 2012, should be Deferred Tax Liability Current Noncurrent a. $0 $72,000 b. $4,800 $67,200 c. $67,200 $4,800 d. $72,000 $0 The following information for Cooper Enterprises is given below: December 31, 2013 Assets and obligations Plan assets (at fair value) $200,000 Accumulated benefit obligation 370,000 Projected benefit obligation 400,000 Other Items Pension asset / liability, January 1, 2013 10,000 Contributions 120,000 Accumulated other comprehensive loss 167,900 There were no actuarial gains or losses at January 1, 2013. The average remaining service life of employees is 10 years. 5. What is the amount that Cooper Enterprises should report as its pension liability on its balance sheet as of December 31, 2013? a. $200,000 b. $30,000 c. $370,000 d. $400,000 6. The amortization of Other Comprehensive Loss for 2014 is: a. $0 b. $12,790 c. $23,000