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Study Resources (Accounting)

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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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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81.In July 2016, Sykick Software Company licenses its accounting software to RayHawk Corporation at a cost of $30,000 for two years and also enters into a contract to install the software for an additional $3,000. Trident sells the software license with or without installation. The accounting software is not modified.
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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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88.The Orlando Company is involved in a three-year long-term contract. The following data relate to this contract: ? 2016 2017 2018 Total Contract price ? ? ? $160,000 Cost incurred each year $24,000 $24,000 $ 56,000 104,000 Cost incurred to date 24,000 48,000 104,000 ? Estimated cost to complete ? 96,000 ? 48,000 ? 0 ? Partial billings each year 12,000 48,000 100,000 ? Cash collected from billings ? 8,000 ? 52,000 ? 100,000 ? ? Required: Prepare the journal entries for each of the following assuming Orlando satisfies its performance obligation over time: 2017.
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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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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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103.?IT Services Co. provides online technology support for consumers remotely via the Internet. For a flat fee, it will scan a customer’s personal computer (PC) for viruses, optimize the PC's performance, and solve any connectivity problems. When a customer calls to obtain the scan services, IT Services Co. describes the.
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11.Deductions that are allowed for income tax purposes but do not qualify as expenses under GAAP are permanent differences. a.True b.False 12.Temporary differences cause a company’s effective tax rate to be different from the enacted tax rate. a.True b.False 13.An operating loss must be carried back two years, starting with the earliest of the two years,.
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85.Freesure Company manufactures and sells commercial refrigerators. It is currently running a promotion in which it pays a $500 rebate to any customer that purchases a refrigeration unit from one of its participating dealers. The rebate must be returned within 90 days of purchase. Given its historical experience and the.
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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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79.Consider each of the following scenarios for Bunsen Suppliers Company: The common practice of Bunsen Suppliers is to obtain a written sales agreement. When an Anson Store called on the phone with an urgent need, however, Bunsen orally agreed to deliver goods in exchange for $6,000, then immediately delivered these goods.
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21.The Partial Billings account is a contra account of the Construction in Progress account. a.True b.False 22.Construction in Progress is an inventory account typically valued at on the balance sheet at net realizable value. a.True b.False 23.The FASB and the IASB jointly issued a comprehensive principles-based revenue recognitionModel entitled a.Revenue Recognition. b.Revenue from Contracts with Customers. c.Principles of Revenue.
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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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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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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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99.Under what conditions does a company recognize revenue over a period of time? 100.Describe the conditions when contract assets and contract liabilities are recognized and presented in financial statements. 101.Mary Streen is getting up to speed on the new guidance on revenue recognition. She is trying to understand the revenue recognition principle.
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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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11.There are two types of license: those that are distinct and those that are satisfied over a period of time. a.True b.False 12.A company that is considered to be an agent in a revenue-producing transaction will recognize revenue for the net amount of consideration received from the customer. a.True b.False 13.When a customer pays a seller.
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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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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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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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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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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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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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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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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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21.Which of the following is not a timing difference that would cause pretax financial accounting income to differ from taxable income? a.Investment revenue is recognized under the equity method for financial reporting purposes but in a later period as dividends are received for income tax purposes. b.Life insurance proceeds are received by.
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1.The amount of incometax expense as determined by GAAP differs from amount determined under the Internal Revenue Code due to measurement and timing. a.True b.False 2.Permanent differences arise due to timing differences between the corporation’s pretax financial income and taxable income. a.True b.False 3.Atemporary difference will result in a deferred tax liability when future taxable income.
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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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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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111.IFRS and GAAP are similar in regard to computing earnings per share components. However, the calculation of the impact from the exercise of options differs. ? Required: a. Describe the difference in treatment of unrecognized compensation cost relating to options in the calculation of EPS. b. Explain why the IFRS approach will systematically result in lower.
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95.What is the proper accounting for volume discounts on sales of products when there is uncertainty about whether the discounted volume level will be attained? 96.Provide two examples of variable consideration. What are the two approaches for estimating variable consideration and how does a company determine which approach should be used? 97.On.
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1.The core principle of revenue recognition is that a company should recognize revenue when it has been earned. a.True b.False 2.One type of revenue is the settlement of a liability that occurs as a result of a company’s primary operating activities. a.True b.False 3.The FASB provides a 4-step model for evaluating when a company should recognize.
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61.Which of the following is not a criterion that indicates a performance obligation is satisfied over time? a.The customer receives control of a delivered product which has an expected useful life of many years. b.The seller’s performance does not create an asset with an alternative use to the seller and the seller.
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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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71.A construction project is expected to take two-and-a-half years to complete. Partial Billings exceeds Construction in Progress. The two accounts are reported together on the balance sheet in the a.current assets section. b.long-term assets section. c.current liabilities section. d.long-term liabilities section. 72.A construction project is expected to take two-and-a-half years to complete. Partial Billings is.
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105.Revenue is recognized for accounting purposes when a performance obligation is satisfied. In some situations, revenue is recognized over time as the fair values of assets and liabilities change. In other situations, however, accountants have developed guidelines for recognizing revenue at the point of sale. ? Required: Explain and justify why revenue is.
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