ACC 302 ACC302 Unit 3 Seminar with Answers (Kaplan University)

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ACC 302 Unit 3 Seminar (Kaplan)

Eckert Corporation's partial income statement after its first year of operations is as follows:

Income before income taxes	$3,750,000
Income tax expense
Current Deferred	$1,035,000 90,000 1,125,000
Net income	$2,625,000

Eckert uses the straight-line method of depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The amount charged to depreciation expense on its books this year was $1,500,000. No other differences existed between book income and taxable income except for the amount of depreciation. Assuming a 30% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year?

At the beginning of 2010; Elephant, Inc. had a deferred tax asset of $4,000 and a deferred tax liability of $6,000. Pre-tax accounting income for 2010 was $300,000 and the enacted tax rate is 40%. The following items are included in Elephant’s pre-tax income:

Interest income from government obligations	$24,000
Accrued warranty costs, estimated to be paid in 2011	$52,000
Operating loss carryforward	$38,000
Installment sales revenue, will be collected in 2011	$26,000
Prepaid rent expense, will be used in 2011	$12,000

Which of the following is required to adjust Elephant, Inc.’s deferred tax asset to its correct balance at December 31, 2010?

Munoz Corp.'s books showed pretax financial income of $1,500,000 for the year ended December 31, 2011. In the computation of income taxes, the following data were considered:

Gain on an involuntary conversion (Munoz has elected to replace the property within the statutory period using total proceeds.)	$650,000
Depreciation deducted for tax purposes in excess of depreciation deducted for book purposes	100,000
Estimated tax payments, 2011	125,000
Enacted tax rate, 2011	30%

What amount should Munoz report as its current income tax liability on its December 31, 2011 Balance Sheet?

Which of the following will not result in a temporary difference?

Horner Corporation has a deferred tax asset at December 31, 2015 of $160,000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 40% for 2012–2014; 35% for 2015; and 30% for 2016 and thereafter. Assuming that management expects that only 50% of the related benefits will actually be realized, a valuation account should be established in the amount of:

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