Author: Anonymous

The following information pertains to Phaedrus Corporation’s defined benefit pension plan: (in thousands) Jan 1, 2020 Jan 1, 2021 Projected benefit obligation $6,000 $6,504 Plan assets 5,760 6,336 AOCI – Prior Service Cost 600 552 AOCI – Net loss 720 786 At the end of 2020, Phaedrus contributed $696,000 to the pension fund and paid benefits of $624,000. The expected rate of return on plan assets was 10% and the actuary’s discount rate is 8%. There were no changes in actuarial estimates and assumptions regarding the PBO.  What is the 2020 service cost for Phaedrus’ plan?

FOR MULTIPLE CHOICE QUESTIONS: Select the response that best completes the statement or answers the question. Unless stated otherwise, round to the nearest dollar and assume all companies have a calendar year. FOR FREE-RESPONSE QUESTIONS: You should clearly support your answers with calculations, explanations, schedules, etc. Your final answer should be clearly designated as such. Unless stated otherwise, round to the nearest dollar and assume all companies have a calendar year. Your journal entries should be in the correct format. See the Journal Entry Formatting Guide below for reference. If you are not comfortable using the Table function, it is acceptable to use spaces or tabs to format your journal entries appropriately. You must use correct and complete account titles. At the discretion of the instructor, the use of any unapproved and unacceptable abbreviations may result in the loss of points. If you decide to present your numbers in thousands, please indicate so and be consistent throughout the exam. Journal Entry Formatting Guide: Debit account 1 Debit amount 1 Debit account 2 Debit amount 2 Credit account 1 Credit amount 1 Credit account 2 Credit amount 2 FAILURE TO FOLLOW THESE INSTRUCTIONS WILL RESULT IN THE LOSS OF POINTS. By selecting “True” below, you certify that you have read and understood the above exam instructions.

On December 31, 2021, Link Corporation leased a machine from Malon Inc. for a three-year period. The lease agreement calls for annual payments in the amount of $16,000 on December 31 of each year, beginning on December 31, 2021. Link has the option to purchase the machine at the end of the lease term for $20,000 when its fair value at that date is expected to be $30,000. The machine’s estimated useful life is expected to be 5 years with no residual value. Link uses straight-line depreciation for this type of machinery. Malon’s implicit rate of return is 12% and Link’s incremental borrowing rate is 14%. Link is aware of Malon’s rate. What is the amount that Link should capitalize as the right-of-use asset and the associated lease liability?

At the beginning of 2021, Minion Inc. has a deferred tax asset balance of $8,000 and a deferred tax liability balance of $12,000. Pre-tax financial accounting income for 2021 was $600,000 and the enacted tax rate for all years is 40%. All previously existing deferred tax amounts reversed during 2021. The following items cause taxable income to be different than pretax financial income: Interest income from municipal bonds = $48,000 Accrued warranty expense (estimated to be paid in 2022) = $104,000 Installment sales revenue (will be collected in 2022) = $52,000 Prepaid rent expense (will be used in 2022) = $24,000 What is the ending balance of Minion’s deferred tax liability at December 31, 2021?

Hyrule Corp. began operations in 2020. For 2020, Hyrule’s pretax accounting income was $290,000, which includes expenses of $13,000 related to tax-exempt municipal bond income and $7,000 of insurance premiums on a life insurance policy for a key officer. Hyrule uses a different depreciation method for financial reporting than it does for tax purposes. Hyrule’s depreciable assets were all purchased on January 1, 2020 for a cost of $800,000. At December 31, 2020, the carrying value of all the depreciable assets was $780,000 and the tax basis was $765,000. This depreciation difference will reverse in a period after 2022. Hyrule offers a two-year warranty on its products. During 2020, the product warranty liability accrued for financial reporting purposes was $150,000 and the amount paid for the satisfaction of warranty liability was $80,000. Hyrule expects to settle the remaining amount equally over the next two years. As of December 31, 2020, the enacted tax rates are 35% for 2020, 40% for 2021, and 45% thereafter. For 2021, Hyrule’s pretax accounting income was $405,000, which includes $150,000 proceeds from a life insurance policy taken out on a key officer of Hyrule. Hyrule also qualified for a dividends received deduction for tax purposes of $10,000. Hyrule’s pretax financial income included $25,000 of installment sales income that has yet to be collected. This income is expected to be collected evenly over the next two years. Hyrule continues to use a different depreciation method for financial reporting than it does for tax purposes. At December 31, 2021, the carrying value of all the depreciable assets was $760,000 and the tax basis was $740,000. As before, this depreciation difference will reverse in a period after 2022. The remaining differences between pretax accounting income and taxable income are due to any reversals of the 2020 temporary differences. The tax rate for 2021 was 40%, but legislation was enacted on June 20, 2021 that will change the tax rate in future years to 41%. In 2021, management of Hyrule determined that it is more likely than not that 34% of the related deferred tax asset will not be fully realized because of pending changes in IRS regulations. Round all dollar amounts to the nearest dollar. Required:  Use the field below to prepare the necessary journal entries regarding Hyrule’s income taxes for the following years: 2020 2021 Failure to correctly date or label your entries will result in a loss of points. For each year, show well-labeled computations for the taxable income, income tax payable, and the beginning balance, ending balance, and change in the deferred tax accounts. Failure to show these computations will result in a loss of points.

If you would like to use the Time Value Tables, they are provided below for reference. TVOM_Tables.pdf

On January 1, 2020, Thor Co. issued a 4-year, $750,000, 6% fixed interest note at par, with interest payable semiannually on June 30 and December 31. Thor now wants to change the note to a variable rate note. As a result, on January 1, 2021, Thor enters into an interest rate swap where it agrees to receive 6% fixed and pay the LIBOR rate on a notional amount of $750,000. At each 6-month period, the variable rate will be reset and will be used to determine the variable rate to be paid for the following six-month period. The LIBOR rate is 6.6% on January 1, 2021 and 5.6% on June 30, 2021. The fair value of the swap was $0 on January 1, 2021 and $30,000 on June 30, 2021. The fair value of the note was $750,000 on January 1, 2021 and $780,000 on June 30, 2021. Required:  Answer the following questions based on the information above. In your response, be sure to specify which question you are answering by numbering your responses (1, 2, or 3). Assuming that all requirements for hedge accounting are met, what is the correct hedging classification (type) for this internet rate swap? Use the field below to prepare all the necessary journal entries made by Thor with regard to the information above on January 1, 2021. If no entry is necessary, write “No entry necessary”.  Use the field below to prepare all the necessary journal entries made by Thor with regard to the information above on June 30, 2021. If no entry is necessary, write “No entry necessary”.  Failure to correctly date (or reference which question number you are answering) will result in a loss of points.

Medicare generally pays for hearing aids when they are needed.  

Comprehensive eye exams for those age 65 years and older should occur every:

Which of the following is required when making a diagnosis of COPD in an older adult?