Question :
91. In its first year of operations, EMB Company reported financial : 1230322
91. In its first year of operations, EMB Company reported financial statement income (prior to income tax expense) of $100,000. In the same year, EMB Company reported $80,000 of taxable income, the difference being due to temporary differences. Assuming the enacted tax rate for the current year and all future years is 30%, what is EMB’s current year adjustment for deferred income taxes? A. Debit to Deferred Income Tax Liability for $6,000B. Debit to Income Tax Expense for $6,000C. Credit to Income Taxes Payable for $6,000D. Credit to Deferred Income Tax Liability for $6,000 E. Credit to Income Tax Expense for $6,000
92. In any given accounting period, the amount a firm reports as income before income taxes for financial reporting in comparison to the amount of taxable income that appears on its income tax return may differ due to temporary differences. Temporary differences include A. bad debt expense, only.B. depreciation on long-lived assets, only.C. interest revenue on municipal bonds, only.D. certain fines and penalties, only.E. bad debt expense and depreciation on long-lived assets.
93. In any given accounting period, the amount a firm reports as income before income taxes for financial reporting in comparison to the amount of taxable income that appears on its income tax return may differ due to permanent differences. Permanent differences include A. interest revenue on municipal bondsB. depreciation on long-lived assetsC. bad debt expenseD. warranty expenseE. none of the above
94. Lally CorporationInformation relating to Lally Corporation for Year 1 and Year 2 is as follows:
Year 1
Year 2
Income before taxes
$5,000,000
$4,000,000
Interest income included above that was not subject to income taxes
100,000
100,000
·
Income before income taxes in Year 1 included rent revenue of $80,000 that was not subject to income tax until its receipt in Year 2
·
Lally was subject to an effective income tax rate of 40% in Year 1 and 2.
(CMA adapted, Jun 86 #7) Refer to the Lally Corporation example. The amount of current income tax expense that would have been reported on Lally Corporation’s Income Statement for the year ended December 31, Year 1 is A. $1,928,000B. $1,960,000C. $1,980,000D. $1,992,000E. $2,000,000
95. Lally CorporationInformation relating to Lally Corporation for Year 1 and Year 2 is as follows:
Year 1
Year 2
Income before taxes
$5,000,000
$4,000,000
Interest income included above that was not subject to income taxes
100,000
100,000
·
Income before income taxes in Year 1 included rent revenue of $80,000 that was not subject to income tax until its receipt in Year 2
·
Lally was subject to an effective income tax rate of 40% in Year 1 and 2.
(CMA adapted, Jun 86, #9) Refer to the Lally Corporation example. Lally Corporation’s current income tax expense for Year 2 was A. $1,560,000B. $1,570,000C. $1,592,000D. $1,600,000E. $1,632,000
96. Lally CorporationInformation relating to Lally Corporation for Year 1 and Year 2 is as follows:
Year 1
Year 2
Income before taxes
$5,000,000
$4,000,000
Interest income included above that was not subject to income taxes
100,000
100,000
·
Income before income taxes in Year 1 included rent revenue of $80,000 that was not subject to income tax until its receipt in Year 2
·
Lally was subject to an effective income tax rate of 40% in Year 1 and 2.
(CMA adapted, Jun 86 #10) Refer to the Lally Corporation example. The amount of deferred income taxes that would have been reported on Lally Corporation’s Statement of Financial Position on December 31, Year 2, is A. $40,000B. $32,000C. $16,000D. $8,000E. zero
97. Some employers specify the benefit that employees will receive during retirement. The employer must contribute sufficient amounts to the pension plan so that those contributions plus earnings from investments made with those contributions will be sufficient to pay the specified benefit. Such plans are referred to as A. defined benefit pension plans.B. defined contribution pension plans.C. deferred compensation plans.D. 529 Plans.E. individual retirement accounts.
98. Some employers promise to contribute a certain amount to the pension plan each period for each employee, usually based on an employee’s salary, without specifying the benefits the employee will receive during retirement. The amounts employees eventually receive depend on the investment performance of the pension plan. Such plans are referred to as A. defined benefit pension plans.B. defined contribution pension plans.C. deferred compensation plans.D. 529 Plans.E. individual retirement accounts.
99. In any given accounting period, the amount a firm reports as income before income taxes for financial reporting in comparison to the amount of taxable income that appears on its income tax return may differ due to A. permanent differences, only.B. temporary differences, only.C. nominal differences, only.D. permanent and temporary differences, only.E. permanent, temporary, and nominal differences.
