Reference no: EM133085589

Questions -

Q1. Penny Corporation, at the end of 2021, its first year of operations, prepared the reconciliation between pretax financial income and taxable income as follows:

Pretax financial income - $750,000

Estimated litigation expense - 1,000,000

Extra depreciation for taxes (1,500,000)

Taxable income - $250,000

The estimated litigation expense of $1,000,000 will be deductible in 2023 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $500,000 in each of the next 3 years. Estimated tax payments for the year is $35,000. The income tax rate is 30% for all years. What amount is the income tax payable to be presented in the statement of financial position at year end?

Q2. On January 1, 2021, Cola Corporation provided the following data in connection with the defined benefit plan: Fair value of plan assets - $6,700,000; Projected benefit obligation - $7,600,000. The accountant revealed the following information for the current year: Current service cost - $1,750,000; Past service cost - $300,000; Discount rate - 10%; Expected return on plan assets - 12%; Actual return on plan assets - $500,000; Contributions to the plan - $2,000,000; Benefit paid to retirees - $1,250,000. How much is the employee benefit expense on December 31, 2021?

Q3. Curie Company leased equipment to a lessee on April 1, 2021 for an 8-year period expiring April 1, 2029. Equal payments under the lease are $600,000 and are due on April 1 of each year. The first payment was made on April 1, 2021. The list selling price of the equipment is $3,520,000 and the carrying amount is $2,800,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments is $3,300,000. How much is the amount of profit on the sale that should be reported for 2021?

Q4. On January 1, 2020, Barn Corporation granted the president, 20,000 share appreciation rights for past services. Those rights are exercisable immediately and expire on January 1, 2023. On exercise, the grantee is entitled to receive cash for the excess of the market price on the exercise date over the market price on the grant date. The grantee did not exercise any of the rights in 2020. The market price of share was $30 on January 1, 2020 and $45 on December 31, 2020. How much should be recognized as compensation expense for 2020?