An unrealized gain from marking an investment to fair value typically creates a deferred tax asset. O True O False
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- QUESTION 13 The practice of including the income tax effect of a particular transaction with the transaction itself on the income statement is known as intraperiod tax allocation. True False39a What is the income that will not be taken into account in the determination of the Financial Profit (Tax Base) and will not be added to the profit? a) Commercial Profit B) Tax Exempt Earnings NS) Taxable Earnings D) Disallowable expenses TO) Legally Accepted ExpensesMultiple Choice Qsn .You have to choose one answer. 1.Which of the following statements is correct? a. Gains that are ordinary income will be assessable income under s .6-5 of ITAA 1997. b. Gains will be ordinary income if they are the type of gains that courts of law consider to be of an income character. c. A gain that comes in regularly/periodically is more likely to be ordinary income than a lump-sum gain. d. Whether or not a gain arises from an illegal activity does not affect whether it is ordinary income. e. All of the above. (2) Which of the following statements is correct? a. Capital gains and capital losses arising from a CGT event are always assessed to the individual partners of a partnership according to their interest. b. partner can have more than one interest in a partnership asset. c .There is a disposal of part of an interest in a partnership asset whenever a new partner is admitted to a partnership. d.All of the above
- 16. Which of the following is NOT correct? a.Tax credits may be refundable or non-refundable. b. Income from capital related transactions is an example of an exempt income for income tax purposes. c.Tax credits are tax previously paid, or an amount used to reduce tax liability if certain conditions are met. d.Tax Relief is income that is not subject to tax.TRUE OR FALSE?1. An excess tax depreciation will result to a deferred tax liability.2. If the carrying amount of an asset is higher than the tax base, the difference is a future taxable amount and therefore there us a deferred tax liability.3. A permanent difference that is nondeductible will have no deferred tax consequence.One-half of capital gain is treated as taxable capital gain and one-half of capital loss is deductible as allowable capital loss. Question 11 options: True False
- 26. Which is FALSE? S1 – All income is taxable. S2 – All exclusions from gross income are exempted. S3 – All passive income subjected to final tax are not items of gross income S4 – All income exempted by law or treaty are exempted from income tax Group of answer choices a. S1 c. S3 d. S4 b. S2Where the carrying amount of an asset or liability is different from the tax base a ‘temporary difference’ can arise. Identify the correct statement pertaining to a temporary difference. Select one: a. A temporary difference only occur if the carrying amount of an asset or liability is the same as the tax base b. A temporary difference can never be taxable. c. A temporary difference can never be deductible for tax purposes. d. A temporary difference will result in a decrease (increase) in income tax payable (recoverable) in future periods when the carrying amount of the asset or liability is recovered or settled.Unrealized losses on investments create a deferred tax asset in the period they first arise. O True O False
- 4. Statement 1: In the sale of a financial asset measured at fair value through OCI, the difference between the selling price and the carrying amount is recorded as a gain or loss on sale of investment. Statement 2: When the fair value of a financial asset measured at fair value through OCI is higher than its carrying amount, an unrealized loss-OCI is debited. a. Only statement 1 is true b. Only statement 2 is true c. Both statements are true d. Both statements are false8. Income is: a. An amount for payment of services, interest, or profit from investment b. The gain derived from capital or labor c. Any material gain, not otherwise excluded by law, realized out of a closed and completed transaction, where there is an exchange of economic value for economic value, with a specified taxable period, under the method of accounting employed. d. A flow of service rendered by capital by the payment of money from it or any other benefit rendered by a fund of capital in relation to such fund through a period of time.5. How do you call a deductible temporary difference? a. Current tax asset. b. Deferred tax asset. c. Current tax liability. d. Deferred tax liability.