| | Fox Company received the following reports of its defined benefit pension plan for the current calendar year: | PBO | | Plan assets | | | Balance, January 1 | $600,000 | Balance, January 1 | $500,000 | | Service cost | 360,000 | Actual return | 50,000 | | Interest cost | 64,000 | Annual contribution | 220,000 | | Benefits paid | (90,000) | Benefits paid | (90,000) | | Balance, December 31 | $934,000 | Balance, December 31 | $680,000 | The long-term expected rate of return on plan assets is 8%. Assuming no other data are relevant, what is the pension expense for the year? | D. | $384,000. | Information for Kent Corp. for the year 2016: Reconciliation of pretax accounting income and taxable income: | Pretax accounting income | $180,000 | | Permanent differences | (15,000) | | | 165,000 | | Temporary difference-depreciation | (12,000) | | Taxable income | $153,000 | Cumulative future taxable amounts all from depreciation temporary differences: | As of December 31, 2015 | $13,000 | | As of December 31, 2016 | $25,000 | The enacted tax rate was 30% for 2015 and thereafter. What would Kent's income tax expense be in the year 2016? | D. | None of these answer choices are correct. | Carlock Inc. began operations in January 2016. For certain of its property sales, Carock recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Carlock recognizes income when it collects cash from the buyer's installment payments. In 2016, Carlock had $600 million in sales of this type. Scheduled collections for these sales are as follows: | 2016 | $60 million | | 2017 | 120 million | | 2018 | 120 million | | 2019 | 150 million | | 2020 | 150 million | | | $600 million | Assume that Carlock has a 30% income tax rate and that there were no other differences in income for financial statement and tax purposes. Ignoring operating expenses and additional sales in 2017, what deferred tax liability would Carlock report in its year-end 2017 balance sheet? | | $180 million. | Of the following temporary differences, which one ordinarily creates a deferred tax asset? | A. | Completed-contract method for long-term construction contracts for tax reporting. | | B. | Installment sales for tax reporting. | | C. | Accrued warranty expense. | | D. | Accelerated depreciation for tax reporting. | | | | | | | | | | | | | | | | |
