A liquidation of LIFO inventories for interim reporting purposes
1. Interim reporting under FASB ASC Topic 270 guidelines refers to financial reporting:
(a) On a monthly basis
(b) On a quarterly basis
(c) On a regular basis
(d) For periods less than a year
2. A liquidation of LIFO inventories for interim reporting purposes may create a problem in measuring cost of sales. Accordingly, cost of sales in interim periods should:
(a) Be determined using the gross profit method
(b) Include the income effect of the LIFO liquidation
(c) Include the expected cost of replacing the liquidated LIFO base
(d) None of the above
3. Bar Company’s effective annual income tax rates for the first two quarters of 2011 are 34% and 30% for the first and second quarter, respectively. Assume that Bar’s pretax income is $240,000 for the first quarter and $180,000 for the second quarter. Income tax expense for the second quarter is computed:
(a) $54,000
(b) $126,000
(c) $135,600
(d) $44,400
4. Assume corporate tax rates of 15% on the first $50,000 of taxable income, 25% on taxable income between $50,000 and $75,000, 34% on taxable income between $75,000 and $100,000, and 39% on taxable income between $100,000 and $335,000. If a corporation estimates its pretax income at $20,000 for the first quarter, $25,000 for the second quarter, $30,000 for the third quarter, and $35,000 for the fourth quarter, its estimated annual effective tax rate is:
(a) 23.77%
(b) 25%
(c) 24.67%
(d) 34%
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Posted 13 May 2017 11:05 AM
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