Question :
91. A company’s income statement reported net income of $40,000 during : 1228547
91. A company’s income statement reported net income of $40,000 during 2010. The income tax return excluded a revenue item of $3,000 (reported on the income statement) because under the tax laws the $3,000 would not be reported for tax purposes until 2011. Which of the following statements is correct assuming a 35% tax rate?
A. A $3,000 deferred tax liability is reported as of December 31, 2010.
B. A $3,000 deferred tax asset is reported as of December 31, 2010.
C. A $1,050 deferred tax liability is reported as of December 31, 2010.
D. A $1,050 deferred tax asset is reported as of December 31, 2010.
92. A company’s income statement reported net income of $80,000 during 2010. The income tax return excluded a revenue item of $6,000 (reported on the income statement) because under the tax laws the $6,000 would not be reported for tax purposes until 2011. Which of the following statements is incorrect assuming a 35% tax rate?
A. Income tax expense on the income statement exceeds the tax liability to the IRS.
B. The $6,000 of revenue creates a deferred tax liability.
C. A $2,100 deferred tax liability is reported as of December 31, 2010.
D. Income tax expense on the income statement is $25,900.
93. A company’s 2010 income tax return reported a $75,000 tax liability. During 2010, the deferred income tax liability account increased $9,000. Which of the following statements is correct?
A. Income tax expense on the 2010 income statement was $75,000.
B. Income tax expense on the 2010 income statement was $64,000.
C. Income tax expense on the 2010 income statement was $9,000.
D. Income tax expense on the 2010 income statement was $84,000.
94. If income tax expense reported on the income statement is $45,000 for 2010, and the tax return for 2010 (the first year) shows an income tax liability of $42,000, the deferred income tax on the balance sheet at the end of 2010 will be which of the following? Assume a 40% tax rate.
A. A $3,000 liability.
B. A $3,000 asset.
C. A $7,500 liability.
D. A $7,500 asset.
95. How much needs to be invested today if your goal is to have $100,000 five years from today? The return on the investment is expected to be 10% and will be compounded semi-annually.
A. $61,390
B. $62,090
C. $66,667
D. $50,000
96. Which of the following correctly describes the accounting for leases?
A. A capital lease is not reported on the balance sheet as a liability.
B. A capital lease reports an asset on the balance sheet.
C. An operating lease reports an operating asset on the balance sheet.
D. An operating lease reports a liability on the balance sheet.
97. Which of the following questions is asked with respect to determining the accounting for leases?
A. Is the lease term greater than 90% of the asset’s estimated life?
B. Is the present value of the payments greater than 75% of the asset’s fair market value?
C. Does the lease provide for an opportunity for the lessee to purchase the leased asset during the lease term at fair market value?
D. Does the lease provide for a transfer of title of the leased asset at the end of the lease term to the lessee?
98. Which of the following questions is incorrect with respect to determining the accounting for leases?
A. Is the lease term greater than 75% of the asset’s expected economic life?
B. Is the present value of the payments greater than 75% of the asset’s fair market value?
C. Does the lease provide for an opportunity for the lessee to purchase the leased asset for a price less than fair market value?
D. Does the lease provide for a transfer of title of the leased asset at the end of the lease term to the lessee?
99. How much needs to be invested today if your goal is to be able to withdraw $5,000 for each of the next ten years beginning one year from today? The return on the investment is expected to be 12%.
A. $44,645
B. $36,291
C. $28,251
D. $50,000
100. How much needs to be invested today if your goal is to be able to withdraw $10,000 for each of the next nine years beginning one year from today and $50,000 ten years from today? The return on the investment is expected to be 6%.
A. $68,017
B. $95,937
C. $78,176
D. $132,075
