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102.Refer to Exhibit 20-5. If Baltimore requires a 7% annual return, what is the correct amount of interest revenue to be recognized by Baltimore for 2016 (round the answer to the nearest dollar)? a. $7,774 b. $7,175 c. $6,527 d. $5,928 103.Refer to Exhibit 20-5. If Baltimore requires a 7% annual return, how much gross profit will Baltimore record.
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72.Which of the following is not a required disclosure by a lessee of an operating lease? a. rental expense for the period b. total contingent rentals c. the amount of any sublease rentals d. the gross amount of assets under operating leases 73.The lessee's disclosures should include the future minimum rental payments as of the date of the latest.
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97.One type of post-retirement benefit other than pensions is healthcare benefits. ? Required: Discuss the major differences between postretirement healthcare benefits and pensions. 98.In addition to providing pensions to their employees, many companies also offerother postemployment benefits. These are benefits going to former employees after employment but before retirement. ? Required: Describe how the cost of these.
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21.A lease that transfers substantially all the risks and benefits of ownership from the lessor to the lessee is referred to as a.a capital lease. b.a capitalization lease. c.an operating lease. d.a transfer lease. 22.Which of the following combinations of payments would cause a lease to be classified as a capital lease? a.minimum periodic rental payments.
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61.An operating loss carryforward occurs when a. prior pretax financial income is insufficient to offset the current period operating loss. b. prior taxable income is insufficient to offset the current period operating loss. c. future pretax financial income is insufficient to offset a current period operating loss. d. future taxable income is insufficient to offset a current period.
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67.On December 31, 2015, Clemson Company determined that the 2015 service cost on its defined benefit pension plan was $245,000. At the beginning of 2015, Clemson had pension plan assets totaling $990,000 and a projected benefit obligation of $750,000. Its discount rate and expected long-term rate of return on plan.
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42.The Peanut Company has a defined benefit pension plan for its employees. The following information pertains to the pension plan: Projected benefit obligation, December 31, 2015 $1,680,000 Fair value of plan assets, December 31, 2015 1,739,000 Accrued/prepaid pension cost (asset), December 31, 2014 51,300 ? The December 31, 2015 adjusting journal entries include a a. debit to Accrued/Prepaid Pension Cost.
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52.The Pension Benefit Guaranty Corporation's purpose is to a. allow companies to exit bankruptcy. b. insure defined contribution pension plans. c. insure defined benefit pension plans. d. guarantee taxpayers that the federal government will pay pension benefits. 53.ERISA (Pension Reform Act of 1974) provides guidance for a. accumulated benefit obligation. b. actual return on plan assets. c. minimum funding during the year. d. projected benefit obligations. 54.GAAP requires.
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82.Which of the following facts would require a lessor to classify a lease as an operating lease? a. Important uncertainties exist about unreimbursable costs yet to be incurred by the lessor. b. No bargain purchase option is provided for by the lease agreement. c. The lease term is 65% of the estimated economic life of the.
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98.Port Deposit, Inc. reports the following deferred tax items at the end of 2016: Item Account Balance Classification 1 $36,000 (dr.) Current asset 2 15,000 (cr.) Noncurrent liability 3 10,000 (cr.) Noncurrent liability 4 16,000 (cr.) Current liability 5 7,000 (dr.) Noncurrent asset 6 3,000 (cr.) Current liability ? Required:Show how the deferred tax items will be reported on the December 31, 2016 balance sheet. 99.James Company reports the following information related to their.
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92.One of the distinguishing characteristics of a direct financing lease is that a. the lessor is normally a dealer or manufacturer. b. the net investment in the lease is equal to the cost of the asset or carrying value of the asset. c. the lease has two sources of earnings: interest revenue and profit or loss.
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82.Smyrna Company had financial and taxable incomes as follows: ? 2016 2017 2018 Pretax financial income $150,000 $140,000 $135,000 Taxable income 115,000 140,000 170,000 The tax rate for all three years was 30%. ? Required: a. Prepare the journal entries to record income taxes for all three years. b. Explain why the taxes paid in 2018 are different from the tax return and the amount reported in the financial.
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89.Rehobeth Company's taxable income and other financial data for 2016 are presented below: Taxable income $500,000 Interest received on municipal bonds 75,000 Estimated bad debt expense (not written off) 40,000 Cash expenditures for product warranty expenses 108,000 Product warranty expense for accounting purposes 142,000 Gross profit on installment sales for 2016 180,000 Gross profit recognized in 2016 for tax purposes based on installment ? sales.
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124.Cambridge Company leased equipment from Amherst Company on January 1, 2016. Information about the lease is as follows: Lease payments, due at the beginning of each year $35,000 Lease term 7 years Estimated useful life of the equipment 10 years Cambridge's incremental borrowing rate 12% Interest rate implicit in the lease (known to Cambridge) 10% Residual value (not guaranteed by Cambridge) $20,000 Fair.
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84.On December 31, 2016, the Town Hall Company had a deferred tax liability balance of $12,570, arising from an excess of MACRS depreciation for tax purposes over straight-line depreciation for accounting purposes. The tax effects of that timing difference are expected to reverse in the following years: ? Timing Enacted Deferred Year Difference Tax Rate Tax Liability 2017 $ 16,000 30% $.
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77.In 2016, the Electrician Company decided to amend its defined benefit pension plan. The amendment gave 7 employees the right to receive future benefits based upon their prior service. Electrician's actuary determined that the prior service cost for this amendment amounts to $550,000. Employee A will retire in 1 year,.
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69.The following information is provided regarding a company's pension plan: Service cost $ 640,000 Projected benefit obligation, Jan. 1 4,500,000 Fair value plan assets, Jan. 1 3,750,000 Amortization of unrecognized prior service cost for the year 250,000 Interest cost 8% Employer contribution to fund 845,000 Expected (and actual) return on plan assets 10%   Required: a. Prepare the December 31 journal entry to record pension expense. b. Explain the difference.
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72.Assuming there are no prior period adjustments during the fiscal year, net income would be affected by Interperiod Income Intraperiod Income Tax Allocation Tax Allocation I. Yes Yes II. No No III. Yes No IV. No Yes ? a. I b. II c. III d. IV 73.Income taxes for financial accounting purposes are apportioned to each of the following items except a. other comprehensive income. b. discontinued operations. c. other revenues and expenses. d. prior period adjustments. 74.Which one of the following requires intraperiod tax.
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72.The Donna Company adopted a defined benefit pension plan on January 1, 2016, and prior service credit was granted to employees. As of January 1, 2016, the prior service cost is $68,250. The unrecognized prior service cost is amortized by the straight-line method over the remaining 15-year service life of.
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90.What four alternative methods for accounting for prior service cost were considered by accounting regulators? 91.What five alternatives were examined by regulators to determine which best met the recognition-measurement criteria of a liability? 92.Define the following:expected postretirement benefit obligation (EPBO)accumulated postretirement benefit obligation (APBO) 93.What are the three major differences between the accounting.
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31.The amount owed the IRS is recorded in the accounting records in which account? a.Income Tax Expense b.Income Tax Liability c.Deferred Tax Expense d.Deferred Tax Liability 32.When Congress changes the tax laws or rates, a corporation's deferred tax liability and asset accounts a.are not adjusted. b.are adjusted as of the end of the year in which the.
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11.A lessee reports noncash investing and financing activity on the statement of cash flows when recording a capital lease. a.True b.False 12.The existence and term of renewal or purchase options and escalation clauses are disclosed for capital leases only. a.True b.False 13.A direct financing capital lease results in a manufacturers or dealers profit or loss and.
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61.Refer to Exhibit 20-2. What is the amount of interest expense associated with the leased equipment for the year ending December 31, 2016? a. $2,400 b. $8,651 c. $9,196 d. $20,000 62.Refer to Exhibit 20-2. What would be the debit to Leased Equipment under Capital Leases on January 1, 2016? (Round amounts to the nearest dollar.) a. $72,096 b. $76,635 c. $100,000 d. $110,000 63.Refer to Exhibit 20-2..
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101.Differences arising between financial accounting and tax accounting fall into three categories, what are the three categories? 102.What two objectives did the FASBidentify for accounting for income taxes? 103.In order to implement the FASB’sobjectives what four principles must a corporation apply to account for its income taxes? 104.Describe the process for determining deferred.
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132.Motor City, Inc. leased equipment from Des Moines Company on January 1, 2016. Annual December 31 payments of $15,000 were required. The present value of these payments, discounted at 9% for nine years, is $89,929 (rounded). The lease is a direct financing lease. ? Required: ?Prepare all December 31, 2016, entries for Des.
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1.Under contributory plans the employees bear the majority of therisksof the plan and contribute towards the plan with deductions from their salaries. a.True b.False 2.The defined benefit plan is a type of plan in which the employer’s contribution into the pension fund is based on a formula. a.True b.False 3.The corridor is defined as 10% of.
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79.Martha Co. has a defined benefit pension plan for its employees. The plan was amended at the beginning of 2016 which increased benefits based on services rendered by certain employees in prior periods. The actuary has reported that unrecognized prior service cost resulting from the amendment is $385,000. Five employees.
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135.South Bend Corporation purchased equipment in December 2015 for $150,000. South Bend leased the equipment to the Kansas Company on January 1, 2016. Lease payments of $43,000 are to be made at the end of each year for six years. The present value of the minimum lease payments at 14%.
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91.Rice, Inc. began operations on January 1, 2016. Depreciation temporary differences were the only differences between pretax financial income (loss) and taxable income (loss) in any year. The income tax rate was 35% in each year and no changes in income tax rates were expected. Pretax financial income (loss) and.
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42.Lewes Company appropriately uses the installment sales method for tax purposes and the accrual method for revenue recognition for accounting purposes. Pertinent data at December 31, 2016, the close of the first year of operations, are as follows: Revenue Recognized Revenue Recognized Customer for Accounting Purposes for Tax Purposes Lowe’s Builders $200,000 $100,000 Top Down Plumbing 500,000 350,000 Glass Plus Windows 600,000 350,000 Lewes's tax.
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41.For a lease that contains a bargain purchase option, minimum lease payments include a.any guarantee by the lessee of the residual value. b.any payments on failure to renew or extend the lease. c.executory costs. d.minimum periodic rental payments required by the lease over the lease term. 42.Executory costs a.are included in the minimum lease payments by.
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1.The lessor is the party in the lease agreement who acquires the right to use the leased asset in exchange for making future lease payments. a.True b.False 2.A capital lease is in economic substance a purchase by the lessee and a sale or financing arrangement by the lessor. a.True b.False 3.A lease is classified as a.
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52.In 2016, the Puerto Rios Company received insurance proceeds of $300,000 payable upon the death of its previous top executive officer. For financial reporting purposes, Puerto Rios included the $300,000 in pretax accounting income. The life insurance proceeds are exempt from income taxes. Assuming an income tax rate of 35%,.
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85.What estimates are necessary to account for a defined benefit pension plan? 86.What five components comprise pension expense? 87.What three methods are available to provide guidance for companies to recognize gains or losses in pension expense? 88.The IASB's 2011 amendment to IAS 19 removedthe smoothing of devices in pension accounting, whichmeans thatcompanies will.
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75.Joan, Inc. started a pension plan on January 1, 2016. At that date, prior service cost of $1,100,000 wasrecognized as a result of prior service creditgranted toexistingemployees. At December 31, 2016, the following information was available: Service cost for 2016 $ 90,000 Fair value of plan assets 225,500 Projected benefit obligation 1,278,000 Employer contribution for 2016 (at.
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31.If an employer were to account for a defined benefit pension plan on the cash basis, it would be a violation of the a.going-concern assumption. b.accrual concept. c.separate entity concept. d.historical accounting. 32.Which statement is false? a.In the computation of pension expense, a negative return on plan assets can be added. b.The amount of prior service cost.
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11.An Internal Revenue Code rule that impacts the design of pension plans is that: a.employee contributions to the pension fund are not taxable to the employeeuntil pension benefits are actually received. b.pension fund earnings are taxable. c.employer contributions to the pension fund are not taxable to the employeeat the timepension benefits are actually.
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112.Which of the following is not a required disclosure by a lessor of a sales-type lease? a. the guaranteed residual value accruing to the benefit of the lessor b. total contingent rentals included in revenue for the period c. unearned income d. a general description of the lessor's leasing arrangements 113.Lessee leased some land and buildings from Lessor. There.
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