Use the Following Information for Questions 70 Through 72

question 44

Multiple Choice

Use the following information for questions 70 through 72.
Lyons Company deducts insurance expense of $126,000 for tax purposes in 2014, but the expense is not yet recognized for accounting purposes. In 2015, 2016, and 2017, no insurance expense will be deducted for tax purposes, but $42,000 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 $108,000 at the end of 2014. There were no deferred taxes at the beginning of 2014.
-Assuming that income taxes payable for 2015 is $144,000, the income tax expense for 2015 would be what amount?

• A) $194,400
• B) $160,800
• C) $144,000
• D) $127,200

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Definitions:

Easements

Rights granted to use the property of another for a specific purpose, such as right of way.

Fixtures

Items that are originally personal property but become real property when attached in a permanent manner to land or a building.

Lost Property

Property that is found where it appears to have been left unintentionally, such as items lost by their rightful owner.

Mislaid Property

Items that the owner has intentionally placed somewhere but then forgotten, differentiating from lost or abandoned property.