In reconciling net income to taxable income, interest earned on municipal bonds is

5.In reconciling net income to taxable income, interest earned on municipal bonds is: (Points: 5)IgnoredA temporary differenceA reversing differenceA permanent difference.

6.In its first year of operations Woodmount Corporation reported pretax accounting income of$500 million for the current year. Depreciation reported in the tax return in excess of depreciationin the income statement was $60 million. The excess tax will reverse itself evenly over the nextthree years. The current year's tax rate of 40% will be reduced under the current law to 35% nextyear and 30% for all subsequent years. At the end of the current year, the deferred tax liabilityrelated to the excess depreciation at the end of the current year will be: (Points: 5)

7.Bumble Bee Co. had taxable income of $7,000, MACRS depreciation of $5,000, bookdepreciation of $2,000, and accrued warranty expense of $400 on the books although no warrantywork was performed. What is Bumble Bee's pretax accounting income? (Points: 5)

8.Puritan Corp. reported the following pretax accounting income and taxable income for its firstthree years of operations:2005$ 350,0002006(600,000)2007700,000Puritan's tax rate is 40% for all years. Assuming that Puritan elected a loss carryback, what wouldbe the net loss in 2006 reported in its income statement? (Points: 5)

9.Reliable Corp. had a pretax accounting income of $30 million this year. This included thecollection of $40 million of life insurance proceeds when several key executives died in a planecrash. Temporary differences for the current year netted out to zero. Reliable has had a 40% taxrate and taxable income of $120 million over the previous two years and plans to elect anoperating loss carryback for any NOL. In the current year financial statements, Reliable wouldreport: (Points: 5)Net income of $34 millionA tax benefit of $10 millionNet income of $30 millionA deferred tax asset of $4 million

10.Clinton Corp. had the following pretax income (loss) over its first three years of operations:2004$1,200,0002005(900,000 )20061,500,000For each year there were no deferred income taxes and the tax rate was 40%. For its 2005 taxreturn, Clinton did not elect a loss carryback. No valuation account was deemed necessary for thedeferred tax asset as of December 31, 2005. What was Clinton's income tax expense in the year2006? (Points: 5)

In reconciling net income to taxable income, interest earned on municipal bonds is:Multiple ChoiceIgnored.A temporary difference.A reversing difference.A permanent difference.Before considering a net operating loss carryforward of $84 million, Fama Corporation reported $25

Recognizing tax benefits in a loss year due to a net operating loss carryforward requires:

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Which of the following causes a temporary difference between taxable and pretax accounting incoMultiple ChoiceInvestment expenses incurred to generate tax-exempt income.MACRS used for depreciating equipment.The dividends received deduction.Life insurance proceeds received due to the death of an executive.

$6taxable income30%tax ratebecause of a single temporary difference, taxable income is only$6 million. No temporary differences existed at the beginning ofthe year, and the tax rate is 30%.Prepare the appropriate journal entry to record income taxes. (Ifno entry is required for a transaction/event, select "No journalentry required" in the first account field. Enter your answers inmillions rounded to 1 decimal place (i.e., 5,500,000 should beentered as 5.5).)Record the income tax.$630%30%A company reports pretax accounting income of $9 million, butbecause of a single temporary difference, taxable income is only$6 million. No temporary differences existed at the beginning ofthe year, and the tax rate is 30%.Prepare the appropriate journal entry to record income taxes. (Ifno entry is required for a transaction/event, select "No journalentry required" in the first account field. Enter your answers inmillions rounded to 1 decimal place (i.e., 5,500,000 should beentered as 5.5).)

deferred portion in$40rent collect$140Taxable inco30%tax rateend of 2019$30rent collect$160Taxable incoIn 2018, Ryan Management collected rent revenue for 2019 tenant occupancy.For financial reporting, the rent is recorded as deferred revenue and thenrecognized as income in the period tenants occupy rental property, but forincome tax reporting it is taxed when collected. The deferred portion of therent collected in 2018 was $40 million. Taxable income is $140 million. Notemporary differences existed at the beginning of the year, and the tax rate is30%. Suppose the deferred portion of the rent collected was $30 million at theend of 2019. Taxable income is $160 million.Prepare the appropriate journal entry to record income taxes. (If no entry isrequired for a transaction/event, select "No journal entry required" in the firstaccount field. Enter your answers in millions (i.e., 10,000,000 should beentered as 10).)

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n 2018tedome9tedomeax expense

EventGeneral JournalDebitIncome tax expense$357,600.00deferred tax liabilityincome tax payableWorkingAOriginal Cost$800,000$800,000BLife (years)4C = A/BAccounting depreciation$200,000D = A x 40% in Year 1Income tax depreciation allowed$320,000Total Depreciation expense$200,000$320,000Tax RateTax $Pretax accounting income$920,000Permanent Difference$26,000Income Subject to taxation$894,000

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When tax rates are changed subsequent to the creation of a deferred tax asset or liability GAAP requires?

Is tax exempt interest income a permanent difference?

Which of the following would never require reporting deferred tax assets or deferred tax liabilities?

Which of the following usually results in an increase in a deferred tax liability quizlet?