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Werner Chemical, Inc., leased a protein analyz...

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Werner Chemical, Inc., leased a protein analyzer on September 30, 2013. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2013. Werner's incremental borrowing rate is 12%. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years. Use PVAD of $1. Required: 1. Determine the present value of the lease payments at September 30, 2013. (Round "PV Factor" to 5 decimal places and final answer to the nearest whole dollar amount.) Present value $ 2. What pretax amounts related to the lease would Werner report in its balance sheet at December 31, 2013? (Round "PV Factor" to 5 decimal places, intermediate and final answers to the nearest whole dollar amount.) Pretax amounts Liability $ Asset $ -------------------------------------------------------------------------------- 3. What pretax amounts related to the lease would Werner report in its income statement for the year ended December 31, 2013? (Round "PV Factor" to 5 decimal places, intermediate and final answer to the nearest whole dollar amount.) Pretax amount $ 4. What pretax amounts related to the lease would Werner report in its statement of cash flows for the year ended December 31, 2013? (Round "PV Factor" to 5 decimal places, intermediate and final answers to the nearest whole dollar amount.) Capital lease $ (Click to select)Significant noncash investing and financing activityCash outflows from operating activityCash outflows from financing activity Interest portion $ (Click to select)Cash outflows from operating activitySignificant noncash investing and financing activityCash outflows from financing activity Principal portion $ (Click to select)Cash outflows from financing activityCash outflows from operating activitySignificant noncash investing and financing activity Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in 000s) 2013 2014 2015 Pretax accounting income $ 250 $ 240 $ 230 Taxable income 290 220 260 -------------------------------------------------------------------------------- The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when earned. The income tax rate is 40% each year. Times-Roman anticipates profitable operations in the future. Required: 1. What is the balance sheet account for which a temporary difference is created by this situation? Unearned subscription revenue Earned subscription revenue 2. For each year, indicate the cumulative amount of the temporary difference at year-end. (Enter your answers in thousands.) December 31 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 2013 2014 2015 Temporary difference $ $ $ -------------------------------------------------------------------------------- 3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? (Enter your answers in thousands.) December 31 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 2013 2014 2015 (Click to select)Deferred tax liabilityDeferred tax asset $ $ $

 

Paper#2253 | Written in 18-Jul-2015

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