Miller Company has a defined benefit pension plan. The following information is
ID: 2574744 • Letter: M
Question
Miller Company has a defined benefit pension plan. The following information is available at year end:
Projected benefit obligation $1,345,000
Accumulated benefit obligation $1,085,000
Vested benefit obligation $ 995,000
Fair value of plan assets $1,030,000
Which of the following would Miller report on its year-end balance sheet?
A long term liability of $1,345,000
Maxie Corp. purchases equipment for $400,000 on 1/1/16. The equipment is expected to have an eight-year life with a residual value of $40,000 for both financial reporting and tax Maxie uses straight line depreciation for financial reporting and double declining balance for tax purposes. Maxie reported Income before depreciation of $500,000 for both 2016 & 2017. For those tax years, Miser reported the following depreciation deductions:
Tax (DDB) Financial (SL)
2016 $100,000 $ 45,000
2017 $ 75,000 $ 45,000
If Maxie Corp has an income tax rate of 40%, which of the following would appear on Maxie’s 12/31/2017 Balance Sheet?
A long term asset of $35,000Explanation / Answer
ans 1 Projected Benefit obligation 1345000 Less: fair value of assets 1030000 Liability 315000 Option C $315000 ans 2 Deferred tax liability 2016 (100000-45000)*40% 22000 2017 (75000-45000)*40% 12000 Total balance of DTL 34000 Option B Deferred Tax Liability $34,000