2 - Hefner Co. at the end of 2007, its first year of...

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Hefner Co. at the end of 2007, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $500,000 Estimated litigation expense 1,250,000 Installment sales (1,000,000 ) Taxable income $ 750,000 The estimated litigation expense of $1,250,000 will be deductible in 2009 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $500,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $500,000 current and $500,000 noncurrent. The income tax rate is 30% for all years. A.The income tax expense is 1. $150,000. 2. $225,000. 3. $250,000. 4. $500,000. B.The deferred tax asset to be recognized is 1. $0. 2. $75,000 current. 3. $375,000 current. 4. $375,000 noncurrent. C.The deferred tax liability—current to be recognized is 1. $75,000. 2. $225,000. 3. $150,000. 4. $300,000. 题题题题题
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   Item Number 1.0000 4.0000 3.0000 The summarized balance sheets of Elston Company and Alley Company as of December 31, 2007 are as follows: Elston Company Balance Sheet December 31, 2007 Assets $1,200,000 Liabilities $ 150,000 Capital stock 600,000 Retained earnings 450,000 Total equities $1,200,000 Alley Company Balance Sheet December 31, 2007 Assets $900,000 Liabilities $225,000 Capital stock 555,000 Retained earnings 120,000 Total equities $900,000 A.If Elston Company acquired a 20% interest in Alley Company on December 31, 2007 for $195,000 and the fair value method of accounting for the investment were used, the amount of the debit to Investment in Alley Company Stock would have been 1. $135,000. 2.
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This note was uploaded on 03/30/2012 for the course ACCOUNTING 1204 taught by Professor Chang during the Spring '11 term at Nanjing University.

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2 - Hefner Co. at the end of 2007, its first year of...

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