Solved by verified expert :1581. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #10
Clipp, Inc., earns book net income before tax of $600,000. Clipp puts into
service a depreciable asset this year, and first year tax depreciation exceeds
book depreciation by $120,000. Clipp has recorded no other temporary or
permanent book-tax differences. Assuming that the U.S. tax rate is 35%, what is
Clipp’s deferred income tax liability reported on its GAAP financial
statements?
a.
$252,000.
b. $210,000.
c. $168,000.
d. $42,000.
1582. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #11
Jogg, Inc., earns book net income before tax of $600,000. Jogg puts into
service a depreciable asset this year, and first year tax depreciation exceeds
book depreciation by $120,000. Jogg has recorded no other temporary or
permanent book-tax differences. Assuming that the U.S. tax rate is 35%, and
that this is Jogg’s first year of operations, what is Jogg’s balance in its
deferred tax asset and deferred tax liability accounts at year end?
a.
$42,000 and $0.
b. $0 and $42,000.
c. $42,000 and $42,000.
d. $0 and $0.
1583. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #12
Qute, Inc., earns book net income before tax of $500,000. In computing its book
income, Qute deducts $50,000 more in warranty expense for book purposes than is
allowed for tax purposes. Qute records no other temporary or permanent book-tax
differences. Assuming that the U.S. tax rate is 35% and no valuation allowance
is required, what is Qute’s total income tax expense reported on its GAAP
financial statements?
a.
$192,500.
b. $175,000.
c. $157,500.
d. $17,500.
1584. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #13
Morrisson, Inc., earns book net income before tax of $500,000. In computing its
book income, Morrisson deducts $50,000 more in warranty expense for book
purposes than is allowed for tax purposes. Morrisson records no other temporary
or permanent book-tax differences. Assuming that the U.S. tax rate is 35% and
no valuation allowance is required, what is Morrisson’s current income tax
expense reported on its GAAP financial statements?
a.
$192,500.
b. $175,000.
c. $157,500.
d. $17,500.
1585. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #14
Never, Inc., earns book net income before tax of $500,000. In computing its
book income, Never deducts $50,000 more in warranty expense for book purposes
than is allowed for tax purposes. Never records no other temporary or permanent
book-tax differences. Assuming that the U.S. tax rate is 35% and no valuation
allowance is required, what is Never’s deferred income tax asset reported on
its GAAP financial statements?
a.
$192,500.
b. $175,000.
c. $157,500.
d. $17,500.
1586. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #15
South, Inc., earns book net income before tax of $400,000 in 2010. South
acquires a depreciable asset in 2010, and first year tax depreciation exceeds
book depreciation by $50,000. At the end of 2010, South’s deferred tax
liability account balance is $17,500. In 2011, South earns $500,000 book net
income before tax, and its book depreciation exceeds tax depreciation by
$20,000. South records no other temporary or permanent book-tax differences.
Assuming that the U.S. tax rate is 35%, what is South’s total income tax expense
reported on its GAAP financial statements for 2011?
a.
$182,000.
b. $175,000.
c. $168,000.
d. $7,000.
1587. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #16
South, Inc., earns book net income before tax of $400,000 in 2010. South acquires
a depreciable asset in 2010, and first year tax depreciation exceeds book
depreciation by $50,000. At the end of 2010, South’s deferred tax liability
account balance is $17,500. In 2011, South earns $500,000 book net income
before tax, and its book depreciation exceeds tax depreciation by $20,000.
South records no other temporary or permanent book-tax differences. Assuming
that the U.S. tax rate is 35%, what is South’s current income tax expense
reported on its GAAP financial statements for 2011?
a.
$182,000.
b. $175,000.
c. $168,000.
d. $7,000.
1588. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #17
South, Inc., earns book net income before tax of $400,000 in 2010. South
acquires a depreciable asset in 2010, and first year tax depreciation exceeds
book depreciation by $50,000. At the end of 2010, South’s deferred tax
liability account balance is $17,500. In 2011, South earns $500,000 book net
income before tax, and its book depreciation exceeds tax depreciation by
$20,000. South records no other temporary or permanent book-tax differences.
Assuming that the U.S. tax rate is 35%, what is South’s balance in its deferred
tax liability account at the end of 2011?
a.
$17,500.
b. $10,500.
c. $7,000.
d. $0.
1589. CHAPTER
14—TAXES ON THE FINANCIAL STATEMENTS Question MC #18
Larson, Inc., hopes to report a total book tax expense of $160,000 in the
current year. This $160,000 expense consists of $240,000 in current tax expense
and an $80,000 tax benefit related to the expected future use of an NOL by
Larson. If the auditors determine that a valuation allowance of $30,000 must be
placed against Larson’s deferred tax assets, what is Larson’s total book tax
expense?
a.
$160,000.
b. $130,000.
c. $190,000.
d. $240,000.
