ACC – Werner Chemical, Inc.,

Werner Chemical, Inc., leased a protein analyzer on September 30, 2013. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2013. Werner’s incremental borrowing rate is 12%. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years. Use PVAD of $1.Required:1.Determine the present value of the lease payments at September 30, 2013. (Round “PV Factor” to 5 decimal places and final answer to the nearest whole dollar amount.)Present value$2.What pretax amounts related to the lease would Werner report in its balance sheet at December 31, 2013? (Round “PV Factor” to 5 decimal places, intermediate and final answers to the nearest whole dollar amount.)Pretax amountsLiability$Asset$——————————————————————————–3.What pretax amounts related to the lease would Werner report in its income statement for the year ended December 31, 2013? (Round “PV Factor” to 5 decimal places, intermediate and final answer to the nearest whole dollar amount.)Pretax amount$4.What pretax amounts related to the lease would Werner report in its statement of cash flows for the year ended December 31, 2013? (Round “PV Factor” to 5 decimal places, intermediate and final answers to the nearest whole dollar amount.)Capital lease$(Click to select)Significant noncash investing and financing activityCash outflows from operating activityCash outflows from financing activityInterest portion$(Click to select)Cash outflows from operating activitySignificant noncash investing and financing activityCash outflows from financing activityPrincipal portion$(Click to select)Cash outflows from financing activityCash outflows from operating activitySignificant noncash investing and financing activityTimes-Roman Publishing Company reports the following amounts in its first three years of operation:($ in 000s)201320142015Pretax accounting income$250$240$230Taxable income290220260——————————————————————————–The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when earned. The income tax rate is 40% each year. Times-Roman anticipates profitable operations in the future.Required:1.What is the balance sheet account for which a temporary difference is created by this situation?Unearned subscription revenueEarned subscription revenue2.For each year, indicate the cumulative amount of the temporary difference at year-end. (Enter your answers in thousands.)December 31————————————————————————————————————————————————————————————————————————————————201320142015Temporary difference$$$——————————————————————————–3.Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? (Enter your answers in thousands.)December 31————————————————————————————————————————————————————————————————————————————————201320142015