Venus Corp.'s worksheet for calculating current and deferred income taxes for Year 1 follows:Year 1Year 2Year 3Pretax incomeUSD1,400Temporary differences:Depreciation(800)USD(1,200)USD2,000Warranty costs400(100)(300)Taxable income1,000(1,300)1,700Loss carryback(1,000)1,0000Loss carryforward0300(300)USD0USD0USD1,400Enacted rate30%30%25%Venus had no prior deferred tax balances. In its Year 1 income statement, what amount should Venus report as:Current income tax expense?
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1 .Footnote disclosures in the financial statements for pensions do not require inclusion of which of the following?
A A detailed description of the plan including employee groups covered. B The amount of unrecognized prior service cost. C The components of period pension costs. D The differences in executive and non-executive plans.
2 .How should plan investments be reported in a defined benefit plan's financial statements?
A At cost. B At fair value. C At net realizable value. D At actuarial present value.
3 .Under current generally accepted accounting principles, which approach is used to determine income tax expense?
A Periodic expense approach. B Asset and liability approach. C "With and without" approach. D Net of tax approach.
4 .For the year ended December 31, Tyre Co. reported pretax financial statement income of USD750,000. Its taxable income was USD650,000. The difference is due to accelerated depreciation for income tax purposes. Tyre's effective income tax rate is 30%, and Tyre made estimated tax payments during the year of USD90,000. What amount should Tyre report as current income tax expense on December 31?
A USD135,000 B USD195,000 C USD105,000 D USD225,000
5 .Quinn Co. reported a net deferred tax asset of USD9,000 in its December 31, Year 1, balance sheet. For Year 2, Quinn reported pretax financial statement income of USD300,000. Temporary differences of USD100,000 resulted in taxable income of USD200,000 for Year 2. At December 31, Year 2, Quinn had cumulative taxable differences of USD70,000. Quinn's effective income tax rate is 30%. In its December 31, Year 2, income statement, what should Quinn report as deferred income tax expense?
A USD60,000 B USD21,000 C USD30,000 D USD12,000
7 .Venus Corp.'s worksheet for calculating current and deferred income taxes for Year 1 follows:Year 1Year 2Year 3Pretax incomeUSD1,400Temporary differences:Depreciation(800)USD(1,200)USD2,000Warranty costs400(100)(300)Taxable income1,000(1,300)1,700Loss carryback(1,000)1,0000Loss carryforward0300(300)USD0USD0USD1,400Enacted rate30%30%25%Venus had no prior deferred tax balances. In its Year 1 income statement, what amount should Venus report as:Deferred income tax expense?
A USD350 B USD95 C USD120 D USD300
8 .Justification for the method of determining periodic deferred tax expense is based on the concept of:
A Objectivity in the calculation of periodic expense. B Recognition of assets and liabilities. C Consistency of tax expense measurements with actual tax planning strategies. D Matching of periodic expense to periodic revenue.
9 .Miro Co. began business on January 2, Year 1. Miro used the double-declining balance method of depreciation for financial statement purposes for its building, and the straight-line method for income taxes. This was the only difference between tax and financial statement accounting. On January 16, Year 3, Miro elected to switch to the straight-line method for both financial statement and tax purposes. The building, which cost USD240,000 in Year 1, had a useful life of 15 years and no salvage value. Data related to the building is as follows:YearDouble-decliningbalance depreciationStraight-linedepreciationYear 1USD30,000USD16,000Year 2USD20,000USD16,000Miro's tax rate is 40%.Which of the following statements is correct?
A Miro's deferred tax asset should be increased by USD7,200 in Year 3. B There should be no increase in Miro's deferred tax asset. C Miro's deferred tax asset should be reduced by USD7,200 in Year 3. D There should be no reduction in Miro's deferred tax liability.
10 .Nest Co. issued 100,000 shares of commonstock. Of these, 5,000 were held as treasury stock at December 31, Year 1.During Year 2, transactions involving Nest's common stock were as follows: May 3 1,000 shares of treasury stock were sold. August 6 10,000 shares of previously unissued stock were sold. November 18 A 2-for-1 stock split took effect. Laws in Nest's state of incorporation protect treasury stock from dilution. At December 31, Year 2, how many shares of Nest's common stock were issued and outstanding?
A Shares Issued 220,000； Outstanding 212,000 B Shares Issued 222,000； Outstanding 218,000 C Shares Issued 220,000； Outstanding 216,000 D Shares Issued 222,000； Outstanding 214,000
