ch16_18_6e_spe

ch16_18_6e_spe - $30,000 10 Amortization $ 3,000...

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Practice Exam Chapters 16-18 Solutions 1. ($ in millions) Current Future Year Taxable 2011 Amounts 2012 2013 2014 Accounting income 48.6 Non-temporary difference (0.6) Temporary difference: Installment sales (36 .0) 9 15 12 Taxable income 12.0 Enacted tax rate 30 % 30 % 40 % 40 % Tax payable currently 3.6 Deferred tax liability 2.7 6.0 4.8 13.5 Less: beginning balance: 0 Change in balance: credit (debit) 13.5 Journal entry at the end of 2011 Income tax expense (to balance) 17.1 Deferred tax liability (determined above) 13.5 Income tax payable (determined above) 3.6 2. ($ in millions) Pretax accounting income $48.6 Income tax expense (17 .1) Net income $31 .5 Requirement 1 Service cost $369,000 Interest cost 180,000 Expected return on the plan assets ($135 actual, less $15 gain) (120,000) Amortization of prior service cost 36,000 Amortization of net loss (calculated below) 3,000 Pension expense $468,000 Problem I Problem II
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Computation of net loss amortization: Net loss (previous losses exceeded gains) $210,000 10% of $1,800,000 (greater than $1,350,000) (180,000 ) Amount to be amortized
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Unformatted text preview: $30,000 10 Amortization $ 3,000 Requirement 2 Pension expense (calculated above) 468,000 Plan assets (expected return on assets) 120,000 PBO ($369 service cost + $180 interest cost) 549,000 Amortization of prior service costOCI 36,000 Amortization of net lossOCI 3,000 Plan assets 450,000 Cash (given) 450,000 Requirement 3 Plan assets 15,000 Gain-OCI 15,000 Requirement 4 PBO 189,000 Plan assets 189,000 Requirement 1 ($ in millions) APBO: Beginning $100 Service cost 12 Interest cost (8% x $100) 8 Loss on APBO 3 Benefit payments (6 ) Ending $117 Requirement 2 ($ in millions) Service cost $12 Interest cost 8 Return on assets (10% x $50) (5 ) Postretirement benefit expense $15 Problem III Solution: Beginning balance $200 Net income 240 2011 preferred dividends (40) 2010 preferred dividends (40) 2011 common dividends (90 ) [30 x 150%] x $2 Ending balance $270 Problem IV Multiple Choice 1. d 2. c 3. d 4. d 5. b...
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This note was uploaded on 06/16/2011 for the course ACC 302 taught by Professor Spurrier during the Spring '09 term at Old Dominion.

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ch16_18_6e_spe - $30,000 10 Amortization $ 3,000...

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