Use the following information for questions 80 through 82:
Lyons Company deducts insurance expense of €84,000 for tax purposes in 2021, but the expense is not yet recognized for accounting purposes. In 2022, 2023, and 2024, no insurance expense will be deducted for tax purposes, but €28,000 of insurance expense will be reported for accounting purposes in each of these years. Lyons Company has a tax rate of 40% and income taxes payable of €72,000 at the end of 2021. There were no deferred taxes at the beginning of 2021.
80. What is the amount of the deferred tax liability at the end of 2021?
a. €33,600
b. €28,800
c. €12,000
d. €0
Ans: a
LO: 2
Bloom: AN
Difficulty: Hard
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
81. What is the amount of income tax expense for 2021?
a. €105,600
b. €100,800
c. €84,000
d. €72,000
Ans: a
LO: 2
Bloom: AN
Difficulty: Hard
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None