hy do companies choose to accelerate depreciation on their tax return and not on their income statement? a. to avoid paying taxes b. to postpone paying taxes c. to match their GAAP financial statements
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Why do companies choose to accelerate
a. to avoid paying taxes
b. to postpone paying taxes
c. to match their GAAP financial statements
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- What would be a reason a company would want to overstate income? A. to help nudge its stock price higher B. to lower its tax bill C. to show a decrease in overall profits D. none of the aboveHow is the sales tax rate usually determined? Does the company get to keep the sales tax as earned revenue?Which of the following statements is false? A For tax purposes, companies can use the MACRS depreciation method. B When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings. C If the expected future cash flow is less than the carrying amount, the asset is considered impaired. D If an impairment loss is recorded, depreciation must be recalculated since the book value changed.
- Why do many companies use one method to calculate depreciation for the income statement prepared for external reporting and and another method for income tax purposes?Which of the following statements is false? A For tax purposes, companies can use the MACRS depreciation method. B When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings. C If the expected future cash flow is less than the carrying amount, the asset is considered impaired. D If an impairment loss is recorded, depreciation must be recalculated since the book value changed. The answer A is wrongDiscuss the difference between the straight-line method of depreciation and the accelerated methods. Why do companies use different depreciation methods for tax reporting and financial reporting?
- A company determines that it is more likely than not that a portion of a deferred tax asset will not be realized. Due to the value of the beginning of the period balance, this determination caused a valuation allowance account to decrease during the current period. This situation will cause Income Tax Expense to decrease. O True O FalseIn which situation does the tax depreciation allow the firms to defer paying income taxes?Which of the following statements about depreciation is not true? a. Depreciation helps companies estimate the cost of doing business b. U.S. tax law permits deductions from taxable income for depreciation c. Depreciable property may be tangible or intangible d. Depreciation is a cash flow that is recognized as an expense to a business.
- A company has only one deductible temporary difference due to the use of the current expected credit loss method (CECL) of recognizing credit losses (ie, bad debts) for financial reporting purposes. The company is trying to determine how the resulting deferred tax asset will be reported on the balance sheet. Which section of the authoritative literature describes whether deferred tax assets and liabilities are classified as current or noncurrent? Enter your response in the answer fields below. Unless specifically requested, your response should not cite implementation guidance. Guidance on correctly structuring your response appears above and below the answer fields. Type the topic here. Correctly formatted FASB ASC topics are 3 digits. FASB ASCWhich of the following accounts would not be involved in preparing the income statement? Group of answer choices Tax expense All the accounts would be involved in preparing the income statement. Interest income Accumulated depreciation Depreciation expenseA company wishes to report the highest earnings possibleaccording to GAAP. Therefore, when calculating depreciation for financial reporting purposes,a. It will follow the MACRS depreciation rates prescribedby the IRS.b. It will estimate the shortest lives possible for itsassets.c. It will estimate the longest lives possible for its assets.d. It will estimate lower residual values for its assets.
