Q1. The ending DTA balance for the current year is based on which of the following:                           

a. the deductible temporary differences reversing in the current year

b. future deductible temporary differences

c. only those future deductible temporary differences that originated in the current year

d. future taxable temporary differences

e. future deductible permanent differences

Q2. A firm began the current year with a $12,000 deferred tax liability balance based on one taxable temporary difference. 80% of this difference reversed during current year. The tax rate is 30%. Taxable income for current year is $75,000. At the end of the current year, the firm accrued $15,000 of salary expense to be paid the following year. Determine income tax expense for the year.

a. 18,400

b. 9,600

c. 15,600

d. 22,500

e. 8,400

Q3. The depreciation difference to be placed into the future temporary difference spreadsheet dated 12/31/x4 is:

a. the difference between book and tax depreciation for 20x4

b. the difference between book and tax depreciation for 20x5

c. the difference between book and tax depreciation for all years before 20x5

d. the difference between book and tax depreciation for all years after 20x4

Q4. Amazingly, a firm began the year with no deferred tax balances. Information for the current year: pretax accounting income is $200,000. Also, common revenues less common expenses net to $214,000. The firm recognized $40,000 of depletion for tax purposes, and $8,000 for the books. On October 1, the firm prepaid $24,000 of rent for the year beginning on that date. Determine income tax expense for the year if the tax rate is 30%.                      

a. 50,400          

b. 45,000          

c. 39,600                         

d. 48,400                        

e. 52,600