41 on january 2 2016 brunswickcorp purchased a depreciable asset for 600 000 the ass 4314555

41 on january 2 2016 brunswickcorp purchased a depreciable asset for 600 000 the ass 4314555

41) On January 2, 2016, BrunswickCorp. purchased a depreciable asset for $600,000. The asset has an estimated 4 year life with no residual value. Straight-line depreciation is being used for financial statement purposes but the following CCA amounts will be deducted for tax purposes:
2016$150,0002019$56,250
2017225,000202028,125
2018112,500202128,125
Assuming an income tax rate of 30% for all years, the deferred tax liability that should be reflected on Brunswick's statement of financial position at December 31, 2017, should be

a)$22,500.

b)$33,750.

c)$45,000.

d)$50,625.

42) A reconciliation of QuebecCorp.'s pre-tax accounting income with its taxable income for 2017, its first year of operations, is as follows:
Pre-tax accounting income$3,000,000
Excess CCA(90,000)
Taxable income$2,910,000
The excess CCA will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 40% in 2017, 35% in 2018, and 30% in both 2019 and 2020. The total deferred tax liability to be reported on Quebec's statement of financial position at December 31, 2017 is

a)$36,000.

b)$31,500.

c)$30,000.

d)$28,500.

43) At the end of 2017, its first year of operations, Ontario Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:
Pre-tax accounting income$300,000
Estimated lawsuit expense750,000
Instalment sales (600,000)
Taxable income$450,000
The estimated lawsuit expense of $750,000 will be deductible in 2019 when it is expected to be paid. The instalment sales will be realized at $300,000 in each of the next two years. The income tax rate is 30% for all years. The deferred tax liability to be recorded is

a)$180,000.

b)$90,000.

c)$67,500.

d)$45,000.

44) At the end of 2017, its first year of operations, Ontario Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:
Pre-tax accounting income$300,000
Estimated lawsuit expense750,000
Instalment sales (600,000)
Taxable income$450,000
The estimated lawsuit expense of $750,000 will be deductible in 2019 when it is expected to be paid. The instalment sales will be realized at $300,000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense to be reported on the income statement is

a)$90,000.

b)$135,000.

c)$150,000.

d)$300,000.

45) At the end of 2017, its first year of operations, Halifax Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:
Estimated lawsuit expense 400,000
Excess CCA for tax purposes(900,000)
Taxable income$300,000
The estimated lawsuit expense of $400,000 will be deductible in 2018 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $300,000 in each of the next three years. The income tax rate is 25% for all years. Halifax adheres to IFRS requirements. The deferred tax liability to be recorded is

a)$225,000.

b)$200,000.

c)$100,000.

d)$0.

46) In its 2017 income statement, its first year of operations, Penelope Corp. reported depreciation of $525,000 and interest revenue from a Canadian corporation of $105,000. For 2017 income tax purposes, Maine claimed CCA of $825,000. The difference in depreciation/CCA will reverse in equal amounts over the next three years. Penelope's income tax rates are 35% for 2017, 30% for 2018, and 25% for both 2019 and 2020.What amount should be included as the deferred tax liability on Penelope's December 31, 2017 statement of financial position?

a) $99,000

b) $90,000

c) $80,000

d) $75,000

47) On January 1, 2017, Lake Corp., a publicly accountable enterprise, purchased 40% of the common shares of Michigan Inc. and accounts for this investment by the equity method. During 2017, Michigan reported earnings of $900,000 and paid dividends of $300,000. Lake assumes that all of Michigan's undistributed earnings will be distributed as dividends in future periods when the enacted tax rate will be 20%. Lake's current income tax rate is 25%.The increase in Lake's deferred tax liability for this temporary difference is

a) $120,000.

b) $100,000.

c) $ 60,000.

d) $ 48,000.

48) At the end of 2017, its first year of operations, Rinaldo Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:
Pre-tax accounting income$300,000
Estimated lawsuit expense750,000
Instalment sales (600,000)
Taxable income$450,000
The estimated lawsuit expense of $750,000 will be deductible in 2019 when it is expected to be paid. The instalment sales will be realized at $300,000 in each of the next two years. The income tax rate is 30% for all years. The deferred tax asset to be recorded is

a)$0.

b)$45,000.

c)$90,000.

d)$225,000.

49) At the end of 2017, its first year of operations, Gaucho Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:
Pre-tax accounting income$800,000
Estimated lawsuit expense 400,000
Excess CCA for tax purposes(900,000)
Taxable income$300,000
The estimated lawsuit expense of $400,000 will be deductible in 2018 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $300,000 in each of the next three years. The income tax rate is 25% for all years. Gaucho adheres to IFRS requirements. The deferred tax asset to be recorded is

a)$200,000.

b)$160,000.

c)$100,000.

d)$60,000.

50) GretnaCorp. reported the following results for calendar 2017, its first year of operations:
Pre-tax accounting income$250,000
Taxable income400,000
The difference between accounting income and taxable income is due to a temporary difference, which will reverse in 2018. Assuming that the enacted tax rates in effect are 30% in 2017 and 25% in 2018, what amount should Gretna record as the deferred tax asset or liability for calendar 2017?

a)$45,000 deferred tax liability

b)$37,500 deferred tax asset

c)$45,000 deferred tax asset

d)$37,500 deferred tax liability

51) In 2017, SavouryLtd. accrued, for book purposes, estimated losses on disposal of unused plant facilities of $750,000. The facilities were sold in March 2018 and a $750,000 loss was recognized for tax purposes. Also in 2017, Savourypaid $50,000 in premiums for a two-year life insurance policy in which the company was the beneficiary. Assuming that the enacted tax rate is 25% in both 2017 and 2018, and that Savoury$390,000 in income taxes in 2017, the amount reported as the deferred tax asset or liability on Savoury's statement of financial position at December 31, 2017, should be a

a)Cannot be determined from the information given.

b)$175,000 asset.

c)$187,500 liability.

d)$187,500 asset.

52) Saucy Inc. reported a taxable and accounting loss of $130,000 for 2017. Its pre-tax accounting income for the last two years was as follows:
2015$60,000
201680,000
The amount that Saucy reports as a net loss for financial reporting purposes in 2017, assuming that it uses the carryback provisions, and that the tax rate is 25% for all years involved, is

a)$0.

b)$97,500.

c)$105,000.

d)$130,000.

53) Hopper Corporation reported the following results for its first three years of operations:
2016 income (before income taxes)$40,000
2017 loss (before income taxes) (360,000)
2018 income (before income taxes)400,000
There were no permanent or reversible differences during these three years. Assume an income tax rate of 30% for 2016 and 2017, and 40% for 2018, and that any deferred tax asset recognized is more likely than not to be realized. If Hopper elects to use the carryback provisions, what income (loss) is reported for 2017?

a)$(360,000)

b)$(348,000)

c)$(220,000)

d)$0

54) Night Owl Inc. reports a taxable and pre-tax accounting loss of $150,000 for 2017. The corporation's taxable and pre-tax accounting income and tax rates for the last two years were:
2015$200,00020%
2016200,00025%
The 2017 tax rate is 30%. If Indiana elects to use the carryback provisions, the amount that should be reported as income tax receivable for 2017 is

a)$50,000.

b)$45,000.

c)$35,000.

d)$30,000.

55) CB Properties Corporation reported the following results for its first three years of operations:
2016 income (before income taxes)$40,000
2017 loss (before income taxes) (360,000)
2018 income (before income taxes)400,000
There were no permanent or reversible differences during these three years. Assume an income tax rate of 30% for 2016 and 2017, and 40% for 2018, and that any deferred tax asset recognized is more likely than not to be realized. If CB Properties elects to use the carryforward provisions and not the carryback provisions, what income (loss) is reported for 2017?

a)$0

b)$(216,000)

c)$(232,000)

d)$(360,000)

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