w1. Johnson Co. prepared the following reconciliation of its pretax F/S income to taxable income for the year ended 12/31/94, its first year of operations:
Pretax financial income
Nontaxable interest rcvd on municipal securities
LT loss accrual in excess of deductible amount
Depr. in excess of F/S amt
Johnson’s tax rate for 1994 is 40%
In it’s 12/31/94 B/S, what should Johnson report as deferred income tax liability? C. 6,000
2.As a result of differences b/t depr. for financial reporting purposes and tax purposes, the financial reporting basis for Noor Co’s sole depreciable asset, acquired in ‘94, exceed its tax basis by $250K at 12/31/94. This difference will reverse in future years. The exacted tax rate is 30% for 1994, and 40% for future years. Noor has no other temporary differences. In it’s 12/31/94 B/S, how should it report the deferred tax effect on this difference? D. As a liability of $100,000
3.On its 12/31/94 B/S, Shin Co. had income taxes payable of $13,0000 and a current deferred tax asset of $20,000 before determining the need for a valuation account. Shin has reported a current deferred tax asset of $15K at 12/31/93. No estimated tax payments were made during ‘94. As 12/31/94, Shin determined that it was more likely than not that 10% of that deferred tax asset would not be realized. In its ‘94 I/S, what amount should Shin report as total income tax expense? C. $10,000
4. Thorn Co. applies Statement of Financial Acct. Stand. No. 109 accounting for Income taxes. At the end of ‘93, the tax effects of temporary differences were as follows:
Def. Tax Asset (Liab)
Related Asset Classification Acc. Tax Depr.
Addt’l Costs in inv. For tax purposes
A valuation allowance was not...
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