Q10. For the year ended 31 December 2004, Pick Co's pretax financial statement income was $400,000 and its taxable income was $300,000. The difference is due to the following:

Interest on tax-exempt municipal bonds             $140,000

Premium expense on key person life insurance       $(40,000)

          Total                                                                  $100,000

Pick's statutory income tax rate is 30 percent. In its 2004 income statement, what amount should Pick report as current provision for tax payable?

A)   $90,000.

B)   $102,000.

C)   $120,000.

Q11. The following tax data is associated with a firm:

• Income tax expense of $25,000.

• Income taxes payable of $30,000.

• Pretax income of $80,000.

• 40% tax bracket.

What is this firm’s alternative effective tax rate?

A)   31.25%.

B)   40.00%.

C)   37.50%.

Q12. A company purchased a new pizza oven directly from Italy for $12,676. It will work for 5 years and has no salvage value. The tax rate is 41%, and annual revenues are constant at $7,192. For financial reporting, the straight-line depreciation method is used, but for tax purposes depreciation is accelerated to 35% in years 1 and 2, and 30% in year 3. For purposes of this exercise ignore all expenses other than depreciation.

What is the tax payable for year one?

A)   $1,909.
   

B)   $779.
   

C)   $1,130. C)

Q13. What is the deferred tax liability as of the end of year one?
   

A)   $1,129.
   

B)   $780.
   

C)   $1,909
   

Q14. What is the deferred tax liability as of the end of year three?
   

A)   $1,029.
   

B)   $780.
   

C)   $2,079.
   

[此贴子已经被作者于2009-1-19 10:45:15编辑过]

答案和详解如下：

Q10. For the year ended 31 December 2004, Pick Co's pretax financial statement income was $400,000 and its taxable income was $300,000. The difference is due to the following:

Interest on tax-exempt municipal bonds             $140,000

Premium expense on key person life insurance       $(40,000)

          Total                                                                  $100,000

Pick's statutory income tax rate is 30 percent. In its 2004 income statement, what amount should Pick report as current provision for tax payable?

A)   $90,000.

B)   $102,000.

C)   $120,000.

Correct answer is A)

According to SFAS 109, Current provision = statutory rate × taxable income

30% = Taxes Payable / $300,000

= 0.30 × $300,000

= $90,000

Q11. The following tax data is associated with a firm:

• Income tax expense of $25,000.

• Income taxes payable of $30,000.

• Pretax income of $80,000.

• 40% tax bracket.

What is this firm’s alternative effective tax rate?

A)   31.25%.

B)   40.00%.

C)   37.50%.

Correct answer is C)

Alternative ETR = (taxes payable / pretax income) = 30,000 / 80,000 = 0.375 or 37.5%.

Q12. A company purchased a new pizza oven directly from Italy for $12,676. It will work for 5 years and has no salvage value. The tax rate is 41%, and annual revenues are constant at $7,192. For financial reporting, the straight-line depreciation method is used, but for tax purposes depreciation is accelerated to 35% in years 1 and 2, and 30% in year 3. For purposes of this exercise ignore all expenses other than depreciation.

What is the tax payable for year one?

A)   $1,909.

B)   $779.

C)   $1,130. C)

Correct answer is

Tax payable for year 1 will be $1,130 = [{$7,192 − ($12,676 × 0.35)} × 0.41]

Q13. What is the deferred tax liability as of the end of year one?

A)   $1,129.

B)   $780.

C)   $1,909

Correct answer is B)         

The deferred tax liability for year 1 will be $780.
Pretax Income = $4,657 = ( $7,192 − $2,535)
Taxable Income = $2,755 = ($7,192 − $4,437)
Deferred Tax liability = $780 = [($4,657 − $2,755)(0.41)]

Alternative solution:
The difference in depreciation at the end of year one is $12,676 × (0.35 − 0.20) = $1901.
Deferred tax liability = difference in depreciation × tax rate = $1901 × 0.41 = $780.

Q14. What is the deferred tax liability as of the end of year three?

A)   $1,029.

B)   $780.

C)   $2,079.

Correct answer is C)         

The deferred tax liability at the end of year 3 will be $2,079 = ($780 + $780 + $519).
Pretax Income = $4,657( $7,192 − $2,535)
Taxable Income = $3,389[$7,192 − ($12,676 × 0.30)]
Deferred Tax liability for year 3 = $519[($4,657 − $3,389)(0.41)]
Deferred Tax liability for year 1 = $780[($4,657 − $2,755)(0.41)]
Deferred Tax liability for year 2 = $780[($4,657 − $2,755)(0.41)]

Alternative solution:
For tax purposes the machine is 100% depreciated out at the end of year three, while for GAAP it is only 60% depreciated.
The difference in depreciation is $12,676 × (1.00 − 0.60) = $5070.
Deferred tax liability = difference in depreciation × tax rate = $5070 × 0.41 = $2079.

谢

3ks!

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