Tyler Company

30. Tyler Company incurred an inventory loss due to a decline in market prices during its first quarter of operations in 2008. At the end of the first quarter, management of the company believed the decline in market prices to be permanent. In the second quarter, the market prices of Tyler’s inventories increased above their acquisition cost. Market prices remained higher than acquisition cost during the remainder of 2008. How should Tyler report the facts above on its first and second quarter income statements?

A. Option A
B. Option B
C. Option C
D. Option D

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31. Denver Company, a calendar-year corporation, had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 2008:

Denver’s income tax expense in its interim income statement for the third quarter should be:
A. $126,000.
B. $68,400.
C. $62,400.
D. $54,000.

32. APB Opinion 28 uses which view of interim reporting?
A. Integral
B. Discrete
C. Segmental
D. Comprehensive

33. Which of the following observations is true of the discrete view of interim reporting?
A. An interim period is viewed as an installment of an annual period.
B. Recognition and adjustment of certain income or expense items may be affected by judgments about the expected results of the entire year’s operations.
C. Each interim period is considered as a basic accounting period to be evaluated as if it were an annual accounting period.
D. One interim period would not bear the entire expense that benefits more than one interim period.

34. Mason Company paid its annual property taxes of $240,000 on February 15, 2009. Mason also anticipates that its annual repairs expense for 2009 will be $1,200,000. This amount is usually incurred and paid in July and August when operations are shut down so that machinery and equipment can be repaired. What amount should Mason deduct for property taxes and repairs in each quarter for 2009?

A. Option A
B. Option B
C. Option C
D. Option D

35. Toledo Imports, a calendar-year corporation, had the following income before tax expense and estimated effective annual income tax rates for the first three quarters in 2008:

Toledo’s income tax expense in its interim income statement for the nine months ended September 30 and for the third quarter, respectively, are:
A. $250,800 and $103,200.
B. $252,000 and $108,000.
C. $252,000 and $103,200.
D. $250,800 and $108,000.