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ACC 302 ACC302 ACC/302 Unit 3 Seminar


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ACC 302 Unit 3 Seminar (Kaplan)

Eckert Corporation's partial income statement after its first year of operations is as follows:

Income before income taxes


Income tax expense



       90,000                   1,125,000

Net income


Eckert uses the straight-line method of depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The amount charged to depreciation expense on its books this year was $1,500,000. No other differences existed between book income and taxable income except for the amount of depreciation. Assuming a 30% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year?

At the beginning of 2010; Elephant, Inc. had a deferred tax asset of $4,000 and a deferred tax liability of $6,000. Pre-tax accounting income for 2010 was $300,000 and the enacted tax rate is 40%. The following items are included in Elephant’s pre-tax income:

Interest income from government obligations


Accrued warranty costs, estimated to be paid in 2011


Operating loss carryforward


Installment sales revenue, will be collected in 2011


Prepaid rent expense, will be used in 2011


Which of the following is required to adjust Elephant, Inc.’s deferred tax asset to its correct balance at December 31, 2010?

Munoz Corp.'s books showed pretax financial income of $1,500,000 for the year ended December 31, 2011. In the computation of income taxes, the following data were considered:

Gain on an involuntary conversion (Munoz has elected to replace the property within the statutory period using total proceeds.)


Depreciation deducted for tax purposes in excess of depreciation deducted for book purposes


Estimated tax payments, 2011


Enacted tax rate, 2011


What amount should Munoz report as its current income tax liability on its December 31, 2011 Balance Sheet?

Which of the following will not result in a temporary difference?

Horner Corporation has a deferred tax asset at December 31, 2015 of $160,000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 40% for 2012–2014; 35% for 2015; and 30% for 2016 and thereafter. Assuming that management expects that only 50% of the related benefits will actually be realized, a valuation account should be established in the amount of:

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