s) Which of the following statements is true about temporary book-tax differences? (N O They are recorded in a deferred tax asset account O They are caused by a difference in the timing of recognition between GAAP and tax O They are caused by a difference in the tax rates between fiscal years O They are caused by a difference in the amount recognized between GAAP and tax

s) Which of the following statements is true about temporary book-tax differences? (N O They are recorded in a deferred tax asset account O They are caused by a difference in the timing of recognition between GAAP and tax O They are caused by a difference in the tax rates between fiscal years O They are caused by a difference in the amount recognized between GAAP and tax

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 23GI

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Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively 3. Temporary difference that results in taxable amounts in future years when the related asset or liability is recovered or settled, respectively 4. The future effects on income taxes, as measured by the applicable enacted tax rate and provisions of the enacted tax low, resulting from temporary differences and operating loss carryforwards at the end of the current year 5. The change during the year in a corporations deferred tax liabilities and assets 6. The deferred tax consequences of future taxable amounts 7. The portion of o deferred tax asset for which it is more likely than not that a tax benefit will not be realized 8. Temporary difference that results in deductible amounts in future years when the related asset or liability is recovered or settled, respectively 9. The sum of income tax payable and deferred tax expense (or benefit) 10. The amount of income taxes paid or payable (or refundable) for the current year 11. An excess of tax deductible expenses over taxable revenues in a year that may be carried forward to reduce taxable income in a future year 12. The excess of taxable revenues over tax deductible expenses and exemptions for the year 13. Income tax expense divided by income before income taxes
1. A temporary difference arises when an element of income is reported for tax purposes in the period: a. After it is reported in financial income and before it is reported in financial income. b. After that is reported in financial income. c. Before it is reported in financial income. d. It will have no effect on the taxable amounts.
Which statement is false?a) Deferred taxes are the product of temporary difference in the recognition ofrevenue and expense for taxable income relative to reported income.b) Deferred taxes arise from the use of the same method of depreciation for tax andreporting purposes.c) Deferred taxes arise when taxes actually paid are less than tax expense reported inthe financial statements.d) Temporary difference causing the recognition of deferred taxes may arise fromthe methods used to account for items such as depreciation, installment sales,leases, and pensions.
In relation to accounting for income taxes, which one of the following statements is correct? a. Tax expense is the sum of current tax expense plus deferred tax expense. b. All movements in deferred tax assets and liabilities are recognised in the statement of profit or loss and other comprehensive income. c. Current tax expense is the sum of tax expense plus deferred tax expense. d. Deferred tax liabilities are determined from deductible temporary differences.
Of the following temporary differences, which one ordinarily creates a deferred tax asset? O Installment sales for tax reporting. O Fines paid for violation of law. O Prepaid expenses. O Estimated warranty expense.
A deferred tax liability or asset that is related to an asset or liability shall be classified in the statement of financial position based on the expected reversal date of the temporary difference. a. TRUE b. FALSE
* Your answer is incorrect. All of the following are procedures for the computation of deferred income taxes except to determine taxes payable. measure the total deferred tax liability for deductible temporary differences. • measure the total deferred tax liability for taxable temporary differences. identify the types and amounts of existing temporary differences.
Which of the following statements is NOT correct? A. Taxable income and accounting profit may differ due to differences between the recognition of revenue and expenses for tax and accounting purposes. B. Deferred tax assets must be assessed for the probability of their recovery. Creation of a deferred tax asset or liability occurs only if it reverses at some future date. OC. Deferred tax assets and liabilities may arise due to temporary differences between accounting profit and taxable income. D. Deferred tax liabilities may arise due to permanent differences between accounting profit and taxable income.
The journal entry required to record the tax effect of the revaluation. a. None of answers given b. Income tax expense (Dr), Deferred tax liability (Cr) c. Deferred tax liability (Dr), Income tax expense (Cr) d. Deferred tax Asset (Dr), Deferred tax liability (Cr)
(Identify Temporary or Permanent Differences) Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.InstructionsFor each item below, indicate whether it involves:(1) A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset.(2) A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability.(3) A permanent difference.Use the appropriate number to indicate your answer for each.(a) ______ The MACRS depreciation system is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some plant assets.(b) ______ A landlord collects some rents in advance. Rents received are taxable in the period when they are received.(c) ______ Expenses are incurred in obtaining tax-exempt income.(d) ______ Costs of guarantees…
1. Which statement is true about intraperiod tax allocation? a. It arises because certain revenue and expense items appear in the income statement either before or after they are included in the tax return b. It is required for the cumulative effect of accounting changes but not for prick period adjustments c. The purpose is to allocate income tax expense evenly over a number of accounting periods d. The purpose is to relate the income tax expense to the items which affect the amount of tax 2. Which temporary difference would result in a deferred tax asset? a. Tax penalty or surcharge b. Dividend received on share investment c. Excess tax depreciation over accounting depreciation d. Rent received in advance included in taxable income but deferred for financial accounting 3. Which temporary difference would result in a deferred tax liability? a. Interest revenue on municipal bonds b. Accrual of warranty expense c. Excess tax depreciation over…
Which of the following is false? a. Under GAAP, deferred taxes are reported based on the classification of the asset or liability to which it relates. b. Under IFRS, all potential liabilities must be recognized. c. Under GAAP, the enacted tax rate is used to measure deferred tax assets and liabilities. d. Under IFRS, all deferred tax assets and liabilities are classified as non-current.