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2007--

2008

( )

FA3

2006

2008-5-14

Question 1 22040
1

10

11

12

13

14

15

16

17

18

19

20

Question 2 22040
1

10

11

12

13

14

15

16

17

18

19

20

2. d $0, gain contingencies are not accrued.

5. c

9. c
10.c
11.d
12.c

14.a
17.c
19.b
20.d

($800,000 .96) + (800 $40) = $800,000; $800,000 1.04 = $832,000


$32,000
$832,000 = $33,280.
$800,000
$1,264,000 $18,000 = $1,246,000
$1,246,000 ($46,000 2/50) = $1,244,160.
($50,000 + $40,000 $45,000) 30% = $13,500.
($600,000 $200,000) 40% = $160,000;
$160,000 30% = $48,000.
($150,000 + $75,000 + $75,000) 30% = $90,000;
$150,000 25% = $37,500;
$90,000 + $37,500 = $127,500.
$1,200,000 + $520,000 + $120,000 + $220,000 $240,000 = $1,820,000.
$1,241,250 $1,100,000 = $141,250.
($1,241,250 $200,000) .04 = $41,650.
$357,000 3/15 = $71,400
$357,000 $71,400 [($357,000 $71,400) 1/7] = $244,800.
($80,000 $72,000) + $104,000 + ($1,080,000 .10) = $220,000.

Question 3 10
(a)
2
Total
Future taxable (deductible) amounts:
Depreciation
$300,000
Litigation
(45,000)
Unearned rent
(25,000)

2005

2006

2007

2008

$75,000

$75,000

$75,000

$75,000
(45,000)
(25,000)

(b) 2
Temporary Differences
Depreciation
Litigation
Unearned rent
Totals

Future Taxable
(Deductible)
Deferred Tax
Amounts
Tax Rate
(Asset)
$300,000
30%
(45,000)
30%
$(13,500)
(25,000)
30%
( 7,500)
$180,000
$(21,000) 90,000

(c)3 Deferred tax expense


$90,000
Deferred tax benefit
(21,000)
Net deferred tax expense
$69,000
(d)3 Income Tax Expense ($63,000 + $69,000) ....................................................
Deferred Tax Asset .........................................................................................
Deferred Tax Liability ......................................................................
90,000
Income Tax Payable ($210,000 30%) ..........................................
63,000

Question 4 10
(a)5 Service cost (projected benefits approach)
Interest on projected benefit obligation (10% $560,000)
Expected return on plan assets (9% $525,000)
Amortization of prior service cost (1)
Amortization of loss (2)
Pension expense

(1)

(2)

Liability
$90,000

132,000
21,000

$450,000
56,000
(47,250)
52,000
22,800
$533,550

$260,000
= $260
1,000
200 $260 = $52,000
Market-related asset value

$525,000
10%
$ 52,500

Projected benefit obligation

$560,000
10%
$ 56,000

Net loss (beginning of period)


Higher of 10% of projected benefit obligation or market-related
asset value

$170,000
56,000

Amount to be amortized

$114,000

1,000Expected Future Years of Service


= = 5 years
200
Number of Employees
$114,000

= $22,800
5 years
(b)5 Pension Expense ............................................................................................
Prepaid/Accrued Pension Cost ............................................................
98,550

Cash

........................................

533,500

435,000

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