A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit the net operating loss to be used to reduce taxable income in future profitable years. How are loss carryforwards recognized for financial reporting purposes?

Q: Deferred tax assets and deferred tax liabilities represent the tax effect of the temporary…

A: Temporary differences are those differences which are there in between carrying value of asset or…

Q: What is the depreciation method that is used for tax accounting purposes? How is it different than…

A: Accelerated depreciation method:

Q: Which of the following creates temporary difference between financial and taxable income? * Interest…

A: Temporary differences are differences between pretax book income and taxable income that will…

Q: The excess of allowable deductions over gross income of the business in a taxable year is known as:…

A: SOLUTION EXPLANATION- FOR INCOME TAX PURPOSE ,A NET OPERATING LOSS (NOL) IS THE RESULT WHEN A…

Q: Differentiate the accounting measurement of current tax liability and current tax asset from…

A: Tax is the charges levied by the central and state government on the net income, sale or capital…

Q: The carry forward periods for losses varies with the type of loss. Briefly describe the carry…

A: A tax loss carry forward is a provision that allows to the taxpayer to move a loss of tax to coming…

Q: temporary difference arises when an element of income is reported for tax purposes in the period:…

A: As per IFRS deferred  tax assets and liabilities  arises on temporary  differences which  can either…

Q: Which of the following is an example of a temporary difference which would result in a deferred tax…

A: Solution: Rent revenue collected in advance included in taxable income before it is included in…

Q: The purpose of an inter-period income tax allocation is to    a. Allow reporting entities to fully…

A: Tax is the amount which an individual or business is liable to pay the government for business…

Q: Deferred income taxes result from: a. The fact that bond interest is deductible in the computa-tion…

A: Option C is correct.

Q: The benefit of future deductible amounts can be achieved only if future income is sufficient to take…

A: Temporary Difference Temporary difference refers to the difference of one income recognized by the…

Q: An item that is considered a nondeductible item in taxable income is recognizing estimated bad debts…

A: Non deductible item in taxable income is an item which will not be considered for deduction while…

Q: . What is the possible treatment for tax purposes of a net operating loss? What is the proper…

A: Net operating loss: When the level of income is less than the expenses for a given or a considered…

Q: added to the financial income in computing for the taxable income?

A: First option is wrong because the unrealizable gains from trading securities is to be deducted from…

Q: The tax law requires that capital gains and losses be separated from other types of gains and…

A: Short-term capital lose are allowed to be setoff against both long-term gain and short-term…

Q: TRUE OR FALSE? Under IFRS, deferred tax liability and deferred tax asset should be reported as…

A: The given statement is True... Under IFRS, deferred tax liability and deferred tax asset should be…

Q: What type of event would create a deferred tax asset and deferred tax liability?

A: Given: The difference in income tax from the currently payable tax.

Q: The justification for the method of determining periodic deferred tax expense is based on the…

A: Deferred tax refers to the difference between the tax stated in the income statement and the tax…

Q: Which of the following statements is incorrect with respect to determining current E & P? a.…

A: Exempted income are not added backe for calculating taxable income,

Q: To arrive at the accumulated taxable income, which of the following items does not represent a…

A: The Accumulated Adjustments Account (AAA) is a balance sheet account that contains the net…

Q: A temporary difference which would result in a deferred tax liability is O excess of tax…

A: Introduction:- A deferred tax liability represents an obligation to pay taxes in the future.…

Q: What are the possible treatments for tax purposes of anet operating loss? What are the circumstances…

A: Net operating loss: When the level of income is less than the expenses for a given or a considered…

Q: temporary difference Interest earned on investments in tax-exempt government securities. Interest…

A: Nondeductible expenses refer to those expenses which a company can subtract from its income in order…

Q: Deferred tax liabilities should be treated as equity when:A . they are not expected to reverse.B .…

A: Deferred tax liability: Deferred tax liability is a tax that is measured or is outstanding for the…

Q: If during the current year, taxable profit is greater than accounting profit and the difference is a…

A: Temporary differences refer to the differences between taxable and pre-tax book income the effect of…

Q: Listed below are items that are commonly accounted for differently for financial reporting purposes…

A: Financial accounting refers to the accounting which helps in keeping a logical as well as systematic…

Q: TRUE OR FALSE? If the carrying amount of a liability is higher than the tax base, the difference is…

A: The given statement is True...If the carrying amount of a liability is higher than the tax base, the…

Q: Under what condition deferred tax assets can be offset against deferred tax liabilities

A: SOLUTION- DEFERRED TAX ASSETS- IT IS AN ITEM ON THE BALANCE SHEET THAT RESULT FROM OVER PAYMENT OR…

Q: Classify the following items that may cause discrepancy between accounting profit and taxable…

A: Taxable income is that the portion of your gross income wont to calculate what proportion tax you…

Q: Listed below are items that are treated differently for accounting purposes than they are for tax…

A: The question is based on the concept of Accounting Standards.

Q: This is not a requisite for business expense to be deductible. Group of answer choices It must be…

A: Business expenses are those expenses incurred in a business organization by carrying on the normal…

Q: A temporary difference which would result in a deferred tax liability is a) installment sale…

A: Definition: Deferred tax liability:- It is the liability of tax that a business has yet not paid in…

Q: Because income from fixed income assets is taxed at a higher income tax rate than capital gains and…

A: Capital gain is the revenue generated from selling the assets either long term assets and short term…

Q: A temporary difference that would not result in a deferred tax asset but not a permanent difference?…

A: Solution: A temporary difference that would not result in a deferred tax asset but not a permanent…

Q: A temporary difference which would result in a deferred tax asset is A. Interest revenue on…

A: Introduction: Temporary differences are those differences arising between accounting and taxable…

Q: Expenditures currently deducted in the tax return but not included with expenses in the income…

A: Solution: Expenditures  currently deducted in the tax return but not included with expenses in…

Q: Classify the following items that may cause discrepancy between accounting profit and taxable…

A: 1. Collections of rental in excess of rent revenue reported during the period is a Taxable temporary…

Q: How is a business activity distinguished from an investment activity? why is this distinction…

A:

Q: The "income tax benefit" account reduces the current tax expense for the year and is a deduction…

A: Income tax: It implies to a financial levy that is imposed or charged on the taxable income of the…

Q: explain how deferred tax liabilities and assets are created and the factors that determine howa…

A: Deferred Tax Liability or Deferred Tax Asset is an integral component of the financial statements.…

Q: If the current tax expense is greater than the total income tax expense during the period, there…

A: Total income tax expense is the expense which are payable by the taxpayer which has not been…

Q: A net operating loss (NOL) carryforward creates: A-a deferred tax liability that should be…

A: Net operating loss is the excess amount of allowable deductions over the taxable income. When the…

Q: When accounting standards require an asset to be expensed immediately but tax rulesrequire the item…

A: A deferred tax asset or DTA is recorded on the balance sheet of the company which results from…

Q: A deferred tax liability or asset that is related to an asset or liability shall be classified in…

A: Solution: True. This is because deferred tax liability or asset are classified in the statement of…

Q: Explain two main reasons why expenses may not be deductible for income  tax/corporation tax purposes

A: Deductible expenses: These include all the expenses that are allowed to be deducted from the gross…

Q: Which of the following results to a deferred tax liability? When the carrying amount of an asset is…

A: Solution: "None of the choices" results to a deferred tax liability. this is because When the…

Q: Deferred tax asset and deferred tax liability are based on future tax rates while current tax asset…

A: The concept of Deferred Tax arises due to the timing difference between income as per the accounting…

Q: A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit…

A: Net Operating Loss Carry forward:The net operating loss is considered as negative taxable income.…