Question

Multiple Choice Question 69

The following information for Carla Vista Enterprises is given below:

			December 31, 2018
Assets and obligations
	Plan assets (at fair value)			$600000
	Accumulated benefit obligation			1385000
	Projected benefit obligation			1225000
Other Items
	Pension asset / liability, January 1, 2018			20000
	Contributions			450000
	Other comprehensive loss in 2018			678700

There were no actuarial gains or losses at January 1, 2018. The average remaining service life of employees is 10 years.

What is the amount that Carla Vista Enterprises should report as its pension liability on its balance sheet as of December 31, 2018?

$650000

$450000

$678700

$625000

Multiple Choice Question 52

At the beginning of 2018, Sandhill Co. purchased an asset for $2200000 with an estimated useful life of 5 years and an estimated salvage value of $190000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Sandhill Co.’s tax rate is 30% for 2018 and all future years.

At the end of 2018, what are the book basis and the tax basis of the asset?

Book basis

Tax basis

$1608000

$1320000

$1798000

$1130000

$1608000

$1130000

$1798000

$1320000

Multiple Choice Question 66

Cullumber Corporation prepared the following reconciliation for its first year of operations:

Pretax financial income for 2018	$2400000
Tax exempt interest	(162000)
Originating temporary difference	(374000)
Taxable income	$1864000

The temporary difference will reverse evenly over the next 2 years at an enacted tax rate of 40%. The enacted tax rate for 2018 is 28%.

What amount should be reported in its 2018 income statement as the deferred portion of income tax expense?

$149600 credit

$960000 credit

$672000 debit

$745600 debit

Answer 1

Multiple Choice Question 69
Projected benefit obligation	$ 1,225,000.00
Plan assets (at fair value)	$600,000
Pension Liability	$    625,000.00

Multiple Choice Question 52
Depreciation =( $2200000-$190000)/5	402000
Book value at end of 2018	$ 1,798,000.00
Book value at end of 2018 (tax basis)
Depreciation rate = 1/5 x 2	40%
Book value at end of 2018 (tax basis)= $2200000 x (1-40%)	$ 1,320,000.00

Multiple Choice Question 66
Deferred portion of income tax expense = $374,000 x 40%	$    149,600.00	Credit