1. Award: 1.00 point  

TB MC Qu. 16-24 (Static) Which of the following creates a...

Which of the following creates a deferred tax liability?

 An unrealized loss from recording inventory at lower of cost or market.

 Accelerated depreciation in the tax return.

 Estimated warranty expense.

 Subscriptions collected in advance.

References

Multiple Choice Difficulty: 2 Medium

TB MC Qu. 16-24 Learning Objective: 16-

(Static) Which of 02 Describe the types
the following of temporary
creates a... differences that cause
deferred tax liabilities
and determine the
amounts needed to
record periodic income
taxes.

 
 2. Award: 1.00 point
 

TB MC Qu. 16-63 (Static) In 2020, HD had reported a deferred...

In 2020, HD had reported a deferred tax asset of $90 million with no valuation allowance. At December 31, 2021,
the account balances of HD Services showed a deferred tax asset of $120 million before assessing the need for a
valuation allowance and income taxes payable of $80 million. HD determined that it was more likely than not that
30% of the deferred tax asset ultimately would not be realized. HD made no estimated tax payments during 2021.
What amount should HD report as income tax expense in its 2021 income statement?

 $50 million.

 $80 million.
  $86 million.

 $116 million.

References

Multiple Choice Difficulty: 3 Hard

TB MC Qu. 16-63 Learning Objective: 16-

(Static) In 2020, 04 Describe when and
HD had reported a how a valuation
deferred... allowance is recorded
for deferred tax assets.

 
 3. Award: 1.00 point
 

TB MC Qu. 16-35 (Algo) The following information relates to...

The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars):
  
       
Pretax accounting income: $260  
Pretax accounting income included:      
Overweight fines (not deductible for tax purposes)   7  
Depreciation expense   66  
Depreciation in the tax return using MACRS:   103  
 
The applicable tax rate is 25%. There are no other temporary or permanent differences.
 
Franklin's taxable income ($ in millions) is:

 $230.

 $37.

 $223.

 $103.

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 16-05 Explain why

permanent differences have no deferred tax
consequences.
 TB MC Qu. 16-35 Learning Objective: 16-
(Algo) The 02 Describe the types
following of temporary
information relates differences that cause
to... deferred tax liabilities
and determine the
amounts needed to
record periodic income
taxes.

 
 4. Award: 1.00 point
 

TB MC Qu. 16-46 (Static) Information for Kent Corp. for the...

Information for Kent Corp. for the year 2021:

 
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, 2020 $ 13,000  
As of December 31, 2021 $25,000  
 
The enacted tax rate was 25% for 2020 and thereafter.
 
What should be the balance in Kent's deferred tax liability account as of December 31, 2021?

 $5,200.

 $6,250

 $25,000.

 None of these answer choices are correct.

References

Multiple Choice Difficulty: 3 Hard Learning Objective: 16-05 Explain why

permanent differences have no deferred tax
consequences.
 TB MC Qu. 16-46 Learning Objective: 16-
(Static) Information 02 Describe the types
for Kent Corp. for of temporary
the... differences that cause
deferred tax liabilities
and determine the
amounts needed to
record periodic income
taxes.

 
 5. Award: 1.00 point
 

TB MC Qu. 16-110 (Static) Information for Hobson Corp. for the...

Information for Hobson Corp. for the current year ($ in millions):

 
       
Income from continuing operations before tax $155  
Loss on discontinued operation (pretax)   32  
Temporary differences (all related to operating income):      
Accrued warranty expense in excess of expense
   
included in operating income 10
Depreciation deducted on tax return in excess of
   
depreciation expense 25
Permanent differences (all related to operating income):      
Nondeductible portion of entertainment expense   5  
 
The applicable enacted tax rate for all periods is 25%.
 
What should Hobson report as net income?

 $91.0 million.

 $46.75 million.

 $83.0 million.

 $115.0 million.

References

Multiple Choice Difficulty: 3 Hard

TB MC Qu. 16-110 Learning Objective: 16-

(Static) Information 10 Explain intraperiod
for Hobson Corp. tax allocation.
for the...

 
 6. Award: 1.00 point  
 TB MC Qu. 16-45 (Static) During the current year, Stern Company had...

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:

 $30 million.

 $60 million.

 $50 million.

 $45 million.

References

Multiple Choice Difficulty: 2 Medium

TB MC Qu. 16-45 Learning Objective: 16-

(Static) During the 03 Describe the types
current year, Stern of temporary
Company had... differences that cause
deferred tax assets and
determine the amounts
needed to record
periodic income taxes.

 
 7. Award: 1.00 point
 

TB MC Qu. 16-39 (Algo) The following information relates to Franklin...

The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars):
 
       
Pretax accounting income: $559  
Pretax accounting income included:      
Overweight fines (not deductible for tax purposes)   5  
Depreciation expense   105  
Depreciation in the tax return  285  

The applicable tax rate is 25%. There are no other temporary or permanent differences.

Franklin's balance sheet at the end of its first year would report:

 A deferred tax liability of $45 million among noncurrent liabilities.

 A deferred tax liability of $45 million among current liabilities.

 A deferred tax asset of $45 million among noncurrent assets.

  A deferred tax asset of $45 million among current assets.

References

Multiple Choice Difficulty: 2 Medium

TB MC Qu. 16-39 Learning Objective: 16-

(Algo) The 08 Explain how
following deferred tax assets and
information relates deferred tax liabilities
to Franklin... are reported in a
classified balance
sheet and describe
related disclosures.

 
 8. Award: 1.00 point
 

TB MC Qu. 16-94 (Algo) Before considering a net operating loss...

Before considering a net operating loss carryforward of $70 million, Fama Corporation reported $220 million of
pretax accounting and taxable income in the current year. The income tax rate for all previous years was 31%. On
January 1 of the current year, a new tax law was enacted, reducing the rate to 26% effective immediately. Fama's
income tax payable for the current year would be: (Round your answer to the nearest whole million.)

 $90 million.

 $49 million.

 $39 million.

 $46 million.

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 16-07 Describe when and
how the tax effects of net operating losses are
recognized in the financial statements.

TB MC Qu. 16-94 Learning Objective: 16-

(Algo) Before 06 Explain how a
considering a net change in tax rates
operating loss... affects the
measurement of
deferred tax amounts.

 
 9. Award: 1.00 point  
 TB MC Qu. 16-105 (Static) A reconciliation of pretax financial...

A reconciliation of pretax financial statement income to taxable income is shown below for See Shipping for the
year ended December 31, 2021, its first year of operations. The income tax rate is 25%.
 
        
Pretax accounting income (income statement) $600,000   
Installment income taxable upon receipt next year   (30,000)  
Warranty expense in excess of deductible amount   5,000   
Tax depreciation in excess of income statement amount   (20,000)  
Taxable income (tax return) $555,000   

 
What amount should See report as a noncurrent item related to deferred income taxes in its 2021 balance sheet?

 Deferred income tax asset of $11,250.

 Deferred income tax liability of $12,500.

 Deferred income tax liability of $45,000.

 Deferred income tax liability of $11,250.

References

Multiple Choice Learning Objective: 16- Learning Objective: 16-08 Explain how deferred
02 Describe the types tax assets and deferred tax liabilities are
of temporary reported in a classified balance sheet and
differences that cause describe related disclosures.
deferred tax liabilities
and determine the
amounts needed to
record periodic income
taxes.

TB MC Qu. 16-105 Learning Objective: 16-

(Static) A 03 Describe the types
reconciliation of of temporary
pretax financial... differences that cause
deferred tax assets and
determine the amounts
needed to record
periodic income taxes.

Difficulty: 3 Hard Learning Objective: 16-

06 Explain how a
change in tax rates
affects the
measurement of
deferred tax amounts.

 
 10. Award: 1.00 point  
TB MC Qu. 16-93 (Static) Assume that Puritan Corp. operates in an...

Assume that Puritan Corp. operates in an industry for which NOL carryback is allowed. Puritan Corp. reported the
following pretax accounting income and taxable income for its first three years of operations:
 
        
2020 $ 350,000   
2021  (600,000)  
2022   700,000   
 
Puritan's tax rate is 25% for all years. Puritan elected a loss carryback.

As of December 31, 2021. Puritan was certain that it would recover the full tax benefit of the NOL that remained
after the operating loss carryback.

What would Puritan report as net income for 2022?

 $620,000.

 $525,000.

 $270,000.

 $460,000.

References

Multiple Choice Difficulty: 3 Hard

TB MC Qu. 16-93 Learning Objective: 16-

(Static) Assume 07 Describe when and
that Puritan Corp. how the tax effects of
operates in an... net operating losses
are recognized in the
financial statements.