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Finance Quiz 4




Question;Quiz 4;Name;1.;Impson;reports income from municipal bond interest of $25,000 in 2014 and is in a 40%;marginal tax bracket. What type of account does this create on the balance;sheet of Impson?;a);Deferred;asset of $10,000;b);Deferred;liability of $10,000;c) There;are no income tax effects;2.;Yaw;uses straight- line depreciation for financial purposes but MACRS (accelerated);for tax. They purchased an asset in January of 2012 that cost $20,000, had no;salvage value and an 8 year life for financial purposes. For tax, they use;MACRS for 5 -year properties. (Rates are 20%, 32%, 19.2%, 11.52%, 11.52% and;5.76%.) What are the effects of this on the 2014 financial statements?;a);$536;originating temporary difference that is asset;b);$536;reversing temporary difference that is liability;c) $536;originating temporary difference that is liability;d);$536;reversing temporary difference that is an asset;3.;Buxton;sells land in 2014 for $90,000. They purchased the land in 2010 for $54,000. The;sale was made on 7-1-2014 with the terms being $10,000 down and $20,000 per;year for the next 4 years on 7-1. Interest can be ignored. Their marginal tax;bracket is 40%. What does this create?;a);A;deferred tax liability of $12,800;b);A;deferred tax asset of $12,800;c) A;deferred tax liability of $32,000;d);A;deferred tax liability of $4,000;4.;Which;of the following is a permanent difference?;a);Company;uses MACRS on tax return and straight line on GPFS;b);Company;uses installment sales for tax but accrual for GPFS;c) Interest;on municipal bonds;d);Interest;on corporate bonds;5.;Using;the installment method on the tax return and the accrual method on the GPFS creates;what?;a) A;future taxable amount;b);A;future deductible amount;c);Nothing;it is a permanent difference;d);A;current taxable amount;6.;Which;of the following is generally the largest?;a);The;ABO;b) The;PBO;c);The;VBO;d);The;value of the pension plan;7.;On;1-1-2014 the PBO of Tac is $12,200,000. The MRAV is $11,248,000. There are net;unrealized losses on the books of the company are $1,309,000. What is the;corridor amount?;a);$12,200,000;b);$1,220,000;c) $1,309,000;d);$1,124,800;8.;How;much of the unrealized loss from above would be amortized if the average;remaining service life is 20years?;a);$4,450;b);$89,000;c) $65,450;d);$56,240;Use the following;information to answer questions 9-13.;Ellis Inc. has a;defined benefit pension plan. Information regarding the plan on 1-1-2014 is as;follow;PBO: $4,300,000;ABO: $3,800,000;Fair value of;pension assets: $ 4,120,000;Accrued Pension;Liability: $180,000;Average remaining;service life: 20 years;2014 Normal cost =;$385,000;Expected return;2014 = 4%;Actual return 2014;= 4.8%;Settlement rate =;3.6%;Contribution to;plan = $360,000;Benefits paid = $120,000;9.;What;is pension expense for 2014?;a);$375,000;b);$357,000;c);$704,600;d) $342,040;10.;What;is the balance in the Accrued Pension Liability account at 12-31-2014?;a);$177,000;b);$195,000;c);$162,040;d);None;of the above;11.;According;to our calculations, what is the PBO at year -end (before the actuary gives us;his estimate)?;a);$4,839,800;b);$4,339,800;c) $4,719,800;d);$4,219,800;12.;What;is the CORRECT balance in the pension plan?;a) $4,557,760;b);$4,284,800;c);$4,317,760;d);None;of the above;13.;The actuary;estimates the PBO at $4,600,000. What is the total actuarial gain or loss on;12-31-2014? (both on the pension plan assets and the PBO);a);$272,760;gain;b) $227,240;loss;c);$152,760;gain;d);$347,240;loss;15. Rollins has 50 employees who are covered by a;defined benefit pension plan. The actuary has compiled the following estimates;regarding how much longer they expect to work: 5 years ? 10 employees, 10;years- 20 employees, 15 years ? 10 employees, and 20 years -10 employees. What;is the average service life of his employees?;a) 12.5 years;b) 12.0 years;c) 15 years;d) 14 years;16.;Jones;reports taxable income of $200,000 in 2014. Financial accounting before taxes;is $230,000. The difference is due to 2 things. Municipal bond interest is;$10,000. The other $20,000 difference is due to accelerated depreciation being;used on the tax return. What is the debit to income tax expense?;a);$92,000;b);$80,000;c) $88,000;d);$96,000;17.;Where;does a company report prior service cost?;a);On the;income statement under ?Other Income or Loss?;b) On;the comprehensive income statement as part of OCI;c);It is;not reported, only a memo entry is made;d);On the;balance sheet as an other asset;18.;Which;of the following amounts does NOT affect the PBO?;a);Prior;Service Cost;b);The;interest component found by multiplying the settlement rate times the PBO;balance;c);The actual return on plan assets;d);The;current year?s service cost;19.;Which;of the following amounts does NOT affect the Plan Assets?;a);Benefits;paid to retirees;b) Prior;service cost amortization;c);Contributions;to the plan;d);The;actual return on plan assets;20.;Which;of the following statements about a contributory defined contribution plan is;true?;a);Only;the employer pays into it;b);Only;the employee pays into it;c) Both;the employer and employee pay into it;d);None;are true


Paper#49313 | Written in 18-Jul-2015

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