20 Jan The following questions are used in the Kaplan CPA
The following questions are used in the Kaplan CPA Review Course to study accounting for income taxes while preparing for the CPA examination. Determine the response that best completes the statements or questions. 1. Scott Corp. received cash of $20,000 that was included in revenues in its 2011 financial statements, of which $12,000 will not be taxable until 2012. Scott s enacted tax rate is 30% for 2011, and 25% for 2012. What amount should Scott report in its 2011 balance sheet for deferred income tax liability? a. $2,000 b. $2,400 c. $3,000 d. $3,600 2. West Corp. leased a building and received the $36,000 annual rental payment on June 15, 2011. The beginning of the lease was July 1, 2011. Rental income is taxable when received. West s tax rates are 30% for 2011 and 40% thereafter. West had no other permanent or temporary differences. West determined that no valuation allowance was needed. What amount of deferred tax asset should West report in its December 31, 2011, balance sheet? a. $ 5,400 b. $ 7,200 c. $10,800 d. $14,400 3. In its December 31, 2011, balance sheet, Shin Co. had income taxes payable of $13,000 and a current deferred tax asset of $20,000 before determining the need for a valuation account. Shin had reported a current deferred tax asset of $15,000 at December 31, 2010. No estimated tax payments were made during 2011. At December 31, 2011, Shin determined that it was more likely than not that 10% of the deferred tax asset would not be realiz
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