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21) What is the deferred tax liability under the deferral method for F2015? F2013 F2014 F2015 Income before tax 120,000 110,000 150,000 Taxable income 85,000 95,000 105,000 Tax rate 30% 25% 35% A) $52,500 B) $36,750 C) $27,500 D) $15,750 22) Which statement is correct? A) The deferral and accrual methods produce the same tax expense when tax rates are constant. B) The deferral method applies new tax rates to accumulated tax.
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14.5   Learning Objective 5 1) What is a "hedge"? A) A financial instrument that is speculative and increases the risk for the company. B) An instrument that moves in the opposite direction to another financial asset or liability. C) An instrument that moves in the same direction as another financial asset or liability. D) A.
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35) Accu Tech Renovations Corp. (ATRC) was incorporated on January I, 2014. At that time it issued 100,000 ordinary shares; 80,000, $20, 3% preferred shares "A"; and 40,000, $20, 6% preferred shares "B." Net income for the year ended December 31, 2014 was $1,800,000. ATRC declares and pays total of.
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37) Accu Tech Renovations Corp. (ATRC) was incorporated on January I, 2014. At that time it issued 100,000 ordinary shares; 80,000, $20, 3% preferred shares "A"; and 40,000, $20, 6% preferred shares "B." Net income for the year ended December 31, 2014 was $1,800,000. ATRC declares and pays total of.
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21) The following information relates to the accounting income for Ontario Uranium Enterprises (QUE) for the current year ended December 31. Income before taxes$850,000 Membership fees—non deductible for tax20,000 Depreciation and depletion expense380,000 CCA470,000 Loss on disposal of equipment (see additional info below)75,000 Tax rate30% During the year, the company sold one of its machines with carrying.
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14) Explain how the dividends on cumulative preferred shares are adjusted in the EPS calculation. What is the underlying logic for this adjustment? 15) Explain how the dividends on cumulative preferred shares are adjusted in the EPS calculation. What is the underlying logic for this adjustment? 16) XYZ Company has 500,000 common.
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10) Indicate whether the item will result in a deductible temporary difference, taxable temporary difference or neither. Item Deductible temporary difference Taxable temporary difference Neither Rent revenue collected in advance that is taxable in the year received CCA that exceeds depreciation expense for property, plant, and equipment Membership dues that are not deductible Percentage of completion income that.
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11) Calculate the income effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 8% and coupon rate of 8% $5,000,000 Issue date January 1, 2015 Maturity date December 31, 2022 Conversion rate for each $1,000 bond 25 ordinary shares Income tax rate 30% A) $0.96 B) $2.24 C) $120,000 D) $280,000 12) Calculate the income effect on the incremental EPS.
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11) Which statement is not correct? A) The accrual method focuses on the balance sheet. B) The deferral method focuses on the income statement. C) The deferral methods matches tax expense to the balance sheet. D) The accrual and deferral methods are both tax allocation methods. 12) Which method reflects the tax effect in the.
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15.1   Learning Objective 1 1) Which statement is correct about earnings per share (EPS)? A) A company's total earning is more meaningful than its EPS. B) EPS represents the total amount of earnings of a company. C) EPS represents an ordinary share's interest in the company. D) The EPS is directly correlated with the company's.
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16.2   Learning Objective 2 1) Which of the following is an example of a "permanent difference"? A) Warranty provisions. B) Dividends on corporations. C) Depreciation on capital assets. D) Completed contract method. 2) Which of the following is not an example of a "temporary difference"? A) Membership fees that are not deductible. B) Advances received on rent revenue. C).
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16.1   Learning Objective 1 1) Which statement is correct? A) Financial reporting rules are generally consistent with tax reporting rules. B) Tax rules are generally consistent the principles used in accrual accounting. C) Tax rules generally require a higher degree of reliability than financial reporting. D) Accounting income is generally similar to taxable income. 2) Which.
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16.3   Learning Objective 3 1) What is the balance of the deferred tax liability due to the rate change? Opening taxable temporary differences 400,000 Tax rate (prior year) 25% Tax rate (current year) 30% A) 100,000 debit B) 100,000 credit C) 120,000 debit D) 120,000 credit 2) What is the effect on the deferred tax balance as a result of the rate.
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24) Know Your Rights Co. has three stock option plans outstanding on December 31, 2015. They provide the holders with the following entitlements: •Stock option A—The holders may purchase 55,000 ordinary shares at any time on or before December 31, 2019 for $41 each. •Stock option B—The holders may purchase 2,000 ordinary.
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27) For stock splits and stock dividends, while it is possible to state the number of shares as beginning-of-year equivalents, it makes more sense to use end-of-year equivalents because financial statement readers are evaluating EPS after the end of the year. Explain why the adjustment for stock splits and stock.
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30) For the year ended December 31, 2011, Harvest Productions Inc. earned $4,000,000. Outstanding preferred shares included $400,000 in 3% cumulative preferred shares issued on January 1, 2010 and $500,000 in 2% non-cumulative preferred shares issued on January 1, 2011. Dividends on the cumulative preferred shares were not declared in.
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17.1   Learning Objective 1 1) Which of the following best describes a "defined benefit plan"? A) High returns in the pension plan result in higher benefit payments to the employees in the future. B) A pension plan that specifies how much funds the employee needs to contribute. C) A plan that requires the employer.
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16.4   Learning Objective 4 1) Which statement is correct? A) Income tax system treats income and losses symmetrically. B) Income tax system treats income and losses asymmetrically. C) When a company has a loss, a refund is received equal to the loss multiplied by the tax rate. D) A loss carryforward has immediate cash flow.
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13) During its first year of operations, Karol Corp. reported the following information: •Income before income taxes for the year was $550,000 and the tax rate was 35%. •Depreciation expense was $100,000 and CCA was $50,000. •Warranty expense was reported at $20,000, while actual cash paid out was $10,000. •$25,000 of expenses included in.
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22) Two different companies have many similarities, including the following: •They all earned net income of $3,500,000 for the year ended December 31, 2017; •They are all subject to a 35% tax rate; •The average price of the companies' ordinary shares during the year was $26; and •Each company had 1,400,000 ordinary shares outstanding.
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33) For the year ended December 31, 2015, Jovial Productions Inc. earned $13,000,000. Outstanding preferred shares included $1,500,000 in 9% cumulative preferred shares issued on January 1, 2012 and 32,000 $160 non-cumulative preferred shares issued on January 1, 2014 that are each entitled to dividends of $7 per annum. Dividends.
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15.2   Learning Objective 2 1) Which statement is correct about basic EPS? A) It indicates the profitability attributable to a company's dilutive shares. B) It indicates the profitability attributable to a company's ordinary shares. C) It indicates the market price attributable to a company's ordinary shares. D) It indicates the market price attributable to a.
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17.2   Learning Objective 2 1) Which statement about "defined contribution plans" is not correct? A) Pension expense equals the contributions made based on the plan formula. B) Pension expense equals the present value of the future benefits to be paid to the retiree. C) Pension cost may be capitalized to the cost of inventory. D).
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15.3   Learning Objective 3 1) Which statement is correct? A) Diluted EPS will always be less than basic EPS. B) Diluted EPS will always be greater than basic EPS. C) Diluted EPS will always be equal to EPS. D) Diluted EPS will be less than or equal to basic EPS. 2) Which statement is correct? A) The.
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45) Micky and Donald Corp. was founded on January I, 2013. At that time it issued 120,000 ordinary shares and 20,000, $30, cumulative 5% preferred shares. Subsequent transactions affecting its shareholdings follow. 2013 •September 1: Micky issued 300,000, $30, non-cumulative 6% preferred shares. •December 1: Micky issued 80,000 ordinary shares. •Dividends were not declared.
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17) Ned Company reported the following information for its fiscal year: Net income $500,000 Preferred dividends 30,000 Common share dividends 20,000 Preferred shares are cumulative and carry an annual dividend of 10,000 The preferred dividends listed above include the current year and prior accumulated dividends. What is the amount of net income available to common shareholders? A) $440,000 B) $450,000 C) $470,000 D).
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41) Summer Surprise Ltd. (SSL) was incorporated on January 1,2014. At that time, it issued 210,000 ordinary shares; 95,000, $65, 2% preferred shares "A"; and 85,000, $65, 4% preferred shares "B." Net income for the year ended December 31, 2014 was $500,000. SSL neither declares nor pays dividends during the.
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31) Under the accrual method, what is the effect of the current year temporary difference in F2015? F2014 F2015 Deferred tax liability 27,500 Revenue 150,000 Taxable income 105,000 Tax rate 25% 35% A) 11,000 B) 42,500 C) 52,500 D) 63,500 32) Under the accrual method, what is the tax expense in F2014? F2013 F2014 F2015 Deferred tax liability 27,000 Revenue 100,000 150,000 Taxable income 95,000 105,000 Tax rate 30% 35% 35% A) 4,500 B) 30,500 C) 35,000 D) 39,500 33) A company earns $390,000 in pre-tax.
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11) Explain why the IASB requires the disclosure of basic and diluted EPS. 12) Explain the difference between basic and diluted EPS. 13) Which of the following is correct about the difference between basic earnings per share (EPS) and diluted earnings per share? A) Basic EPS uses total common shares outstanding, whereas diluted.
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43) Summer Surprise Ltd. (SSL) was incorporated on January 1,2014. At that time, it issued 210,000 ordinary shares; 95,000, $65, 2% preferred shares "A"; and 85,000, $65, 4% preferred shares "B." Net income for the year ended December 31, 2014 was $500,000. SSL neither declares nor pays dividends during the.
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15.4   Learning Objective 4 1) Which statement is correct? A) Out of the money stock options are the most dilutive. B) Convertible bonds are the most dilutive. C) Convertible preferred shares are the most dilutive. D) In the money stock options are the most dilutive. 2) Which statement is correct about diluted EPS? A) The incremental EPS.
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11) Which statement is correct? A) Issued options are always anti-dilutive. B) Issued options are always dilutive. C) Purchased options are always anti-dilutive. D) Purchased options are always dilutive. 12) Which statement is correct? A) Dilutive potential ordinary shares, if converted, will decrease EPS or decrease the loss per share from continuing operations. B) Dilutive potential ordinary.
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20) Explain why only in-the-money options need be considered in the diluted EPS calculations. 21) Two different companies have many similarities, including the following: •They all earned net income of $3,500,000 for the year ended December 31, 2017; •They are all subject to a 35% tax rate; •The average price of the companies' ordinary.
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19) The following data represent the differences between accounting and tax income for Seafood Imports Inc., whose pre-tax accounting income is $650,000 for the year ended December 31. The company's income tax rate is 45%. Additional information relevant to income taxes includes the following. a. Capital cost allowance of $270,000 exceeded.
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