3P33_QUIZ_2_2010+answers

3P33_QUIZ_2_2010+answers - ACTG 3P33 QUIZ # 2 JUNE 25, 2010...

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ACTG 3P33 QUIZ # 2 JUNE 25, 2010 STUDENT NAME___ __________________________ D_1. On December 31, 2008 Pringle Co. reported a $4,500 future tax liability due a $10,000 temporary difference between the net book value of its equipment and the tax base of the equipment. In 2009 the tax rate was decreased from 45% to 40%. If Pringle has no other temporary differences, the effect of this change on its tax provision for the year ended December 31, 2009 will be: a) $225 debit to future tax expense b) $225 credit to future tax benefit c) $500 debit to future tax expense d) $500 credit to future tax benefit e) $225 credit to current tax benefit D__2.During its first year of operations Clark reported $200,000 income before taxes after deducting $20,000 warranty expense. For taxes Clark is allowed to claim only the $10,000 expenditures actually made for warranty work in the current year. Assuming that Clark’s tax rate is 40% and that Clark has made no tax payments for the year, at the end of the year Clark will report: a) $80,000 tax expense; $4,000 future tax liability b) $80,000 taxes payable; $4,000 future tax asset c) $84,000 taxes payable; $10,000 future tax asset d) $84,000 taxes payable; $4,000 future tax asset e) none of the above E_3. Which of the following statements if FALSE? a) The taxes payable method involves fewer assumptions than comprehensive tax allocation b) The partial tax allocation method records future tax assets and liabilities only for temporary differences that are expected to reverse in the foreseeable future c) Not all Canadian firms are required to use the comprehensive tax allocation method. d) The taxes payable method is simpler than comprehensive tax allocation. e) The balance sheet classification of future tax liabilities as current or noncurrent depends on whether or not they will reverse in the next 12 months. B_4.
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3P33_QUIZ_2_2010+answers - ACTG 3P33 QUIZ # 2 JUNE 25, 2010...

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