1. Wayne Co. had a decrease in deferred tax liability of $34 million, a decrease in...
1. Wayne Co. had a decrease in deferred tax liability of $34 million, a decrease in deferred tax assets of $24 million, and an increase in tax payable of $114 million. The company is subject to a tax rate of 25%. The total income tax expense for the year was:
104 mil
128 mil
124 mil
158 mil
2. N Corp. entered into a nine-year finance lease on a warehouse on December 31, 2021. Lease payments of $28,000, which includes maintenance services of $1,200, are due annually, beginning on December 31, 2022, and every December 31 thereafter. N Corp. does not know the interest rate implicit in the lease; N's incremental borrowing rate is 10%. The rounded present value of an ordinary annuity for nine years at 10% is 5.7590. What amount should N report as recorded lease liability at December 31, 2021?
154,341
161,252
168,000
241,200
Homework Answers
1) Total income tax expense = Tax payable - Deferred tax liability (decrease) + Deferred tax assets(decrease)
= 114 - 34 + 24
= 104 million
2) Lease liability = (Annual lease payments - Maintenance services) * present value of ordinary annuity for nine years
= (28000 - 1200) * 5.759
= $154341
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