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Homework answers / question archive / Bakersfield College ACG 2021 1)Ignoring operating expenses and additional sales in 2017, what deferred tax liability would Isaac report in its year-end 2017 balance sheet? $ 54 million $144 million $126 million $180 million

Bakersfield College ACG 2021 1)Ignoring operating expenses and additional sales in 2017, what deferred tax liability would Isaac report in its year-end 2017 balance sheet? $ 54 million $144 million $126 million $180 million

Accounting

Bakersfield College

ACG 2021

1)Ignoring operating expenses and additional sales in 2017, what deferred tax liability would Isaac report in its year-end 2017 balance sheet?

    1. $ 54 million
    2. $144 million
    3. $126 million
    4. $180 million.

 

 

.

 

 

  1. Suppose that, in 2017, legislation revised the income tax rates so that Isaac would be taxed in 2018 and beyond at 40%, rather than 30%. Assume that there were no other differences in income for financial statement and tax purposes. Ignoring operating expenses and additional sales in 2017, what deferred tax liability would Isaac report in its year-end 2017 balance sheet?
    1. $168 million
    2. $144 million
    3. $126 million
    4. $240 million.

 

 

 

 

  1. In the statement of cash flows, by using the indirect method for determining cash flows from operating activities, a decrease in deferred tax liabilities is:
    1. Added to net income.
    2. Subtracted from net income.
    3. Ignored.
    4. Included under financing activities.

 

 

 

  1. Which of the following statements is true as to GAAP regarding accounting for income taxes, and its use of the asset and liability approach?
    1. Considerable flexibility is permitted in the balance sheet classification of deferred tax amounts.
    2. The approach recognizes the time value of money.
    3. The approach is consistent with a balance sheet emphasis of U.S. GAAP and the International Financial Reporting Standards (IFRS).
    4. The approach is consistent with cash basis accounting.

 

 

 

Use the following to answer questions:

 

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

 

Pretax accounting income:                                                                                      $200

Pretax accounting income included:

Overweight fines (not deductible for tax purposes)                                  5

Depreciation expense                                                                                          70

Depreciation in the tax return using MACRS:                                                     110

The applicable tax rate is 40%. There are no other temporary or permanent differences.

 

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

a.     $ 40.

b.     $165.

c.     $110.

d.     $160.

 

 

 

  1. Franklin Freightways experienced ($ in millions) a current:
    1. Tax liability of $66.
    2. Tax liability of $36.
    3. Tax liability of $70.6.
    4. Tax benefit of $10 due to the NOL.

 

 

 

  1. Franklin's net income ($ in millions) is: a.         $134.

b.     $124.

c.     $119.4.

d.     $118.

 

 

 

  1. Which of the following must Franklin Freightways disclose related to the income tax expense reported in the income statement ($ in millions)?
    1. Only the current portion of tax expense of $66.

 

    1. Only the total tax expense of $82.
    2. Both the current portion of the tax expense of $66 and the deferred portion of the tax expense of $16.
    3. None of these answer choices are correct.

 

 

 

 

  1. Franklin's balance sheet at the end of its first year would report:
    1. A deferred tax liability of $16 among noncurrent liabilities.
    2. A deferred tax liability of $16 among current liabilities.
    3. A deferred tax asset of $16 among noncurrent assets.
    4. A deferred tax asset of $16 among current assets.

 

 

 

 

  1. Woody Corp. had taxable income of $8,000 in the current year. The amount of MACRS depreciation was $3,000, while the amount of depreciation reported in the income statement was

$1,000. Assuming no other differences between tax and accounting income, Woody's pretax accounting income was:

a.     $ 5,000.

b.     $ 6,000.

c.     $10,000.

d.     $11,000.

 

 

  1. Alamo Inc. had $300 million in taxable income for the current year. Alamo also had a decrease in deferred tax assets of $30 million and an increase in deferred tax liabilities of $60 million. The company is subject to a tax rate of 40%. The total income tax expense for the year was:
    1. $390 million.
    2. $210 million.
    3. $150 million.
    4. $180 million.

 

 

 

 

  1. Wayne Co. had an decrease in deferred tax liability of $20 million, a decrease in deferred tax assets of $10 million, and an increase in tax payable of $100 million. The company is subject to a tax rate of 40%. The total income tax expense for the year was:
    1. $90 million.
    2. $100 million.
    3. $110 million.
    4. $130 million.

 

 

 

 

 

  1. Plutonic Inc. had $400 million in taxable income for the current year. Plutonic also had a decrease in deferred tax assets of $50 million and recognized tax expense of $80 million. The company is subject to a tax rate of 40%. The change in deferred tax asset was a/an:
    1. increase of $30 million.
    2. increase of $130 million.
    3. decrease of $30 million.
    4. decrease of $130 million.

 

 

 

 

  1. During the current year, Stern Company had pretax accounting income of $45 million. Stern's only temporary difference for the year was rent received for the following year in the amount of

$15 million. Stern's taxable income for the year would be:

    1. $30 million.
    2. $60 million.
    3. $50 million.
    4. $45 million.

 

 

 

Use the following to answer questions:

 

Information for Kent Corp. for the year 2016:

 

Reconciliation of pretax accounting income and taxable income:

 

Pretax accounting income

$180,000

Permanent differences

(15,000)

 

165,000

Temporary difference-depreciation

(12,000)

Taxable income

$153,000

 

Cumulative future taxable amounts all from depreciation temporary differences: As of December 31, 2015                   $13,000

As of December 31, 2016        $25,000

The enacted tax rate was 30% for 2015 and thereafter.

 

  1. What should be the balance in Kent's deferred tax liability account as of December 31, 2016? a.         $5,200.

b.     $7,500.

c.     $25,000.

d.     None of these answer choices are correct.

 

 

 

 

  1. What should Kent report as the current portion of its income tax expense in the year 2016? a.         $45,900.

b.     $49,500.

c.     $54,000.

d.     None of these answer choices are correct.

 

 

 

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