Sometimes a temporary difference will produce future deductible amounts. Explain what is meant by future deductible amounts. Describe two general situations that have this effect. How are such situations recognized in the financial statements?

Q: cases would affect the current assets portion of the balance sheet

A: First option is wrong because when Current Tax Expense > Tax Payments, there is a current…

Q: What do we mean by revenue recognition? What does GAAP say about proper revenue recognition?

A:

Q: Describe the procedures for determining after-tax net cash flows in taxable situations?

A: Net cash flow after tax is an important measure used for the purpose of evaluation of company's…

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: What is the authoritative literature addressing revenue recognition when right of return exists?

A: Financial accounting standards board (FASB): This is the organization which creates, develops, and…

Q: What is meant by “tax allocation within a period”? What is the justification for such practice?

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…

Q: Briefly describe the tax depreciation system under MACRS.

A: MACRS is an abbreviation of the Modified Accelerated Cost Recovery System.  The present U.S. tax…

Q: Which of the following payment is a capital expenditure and not deductible under profits tax?

A: 1(a)  Payment to a departing employee agree for not competing with the company.   1(b)  1,3 and 4…

Q: Which is a deductible tax expense? Surcharges and penalties

A: Deductible tax expenses In a business entity the deductible tax expenses which includes any ordinary…

Q: In constructing the amortization schedule, the Principal at the Beginning for the second period is…

A: Amortization schedule is the schedule that depicts the complete repayment of a loan including the…

Q: How do unearned revenues arise?

A:

Q: How are deferred taxes calculated? What determines if the company has a deferred asset or a deferred…

A: Deferred tax is a fictitious asset or liability that reflects company income taxation on a premise…

Q: Describe the types of temporary differences that cause deferred tax assets and determine the amounts…

A: Deferred tax liabilities It is a type of liability that arises due to the difference between the tax…

Q: What is a temporary difference related to deferred taxes?

A: Deferred Taxes:   The timing difference of tax effect called Deferred tax. Its recognized on all…

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: Which of the following may be a current liability? Withheld Income Taxes Deposits Received from…

A: The liabilities are classified as current liabilities and long term liabilities.

Q: What is the amount of itemized deductions that can be claimed on the state return?

A: Itemized deduction is the amount of deduction that is subtracted from the gross income and it…

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: Explain the conceptual underpinnings of accounting for temporary differences and the four-step…

A: Income tax: Income tax refers to the direct tax levied on individual person or business and…

Q: It can be said that the actual cost of an expenditure that is deductible for tax purposes is less…

A: Tax payable is the amount that is to be paid by the tax payer to the tax receivable individual or…

Q: How can we determine the annual depreciation for tax purposes?

A: Depreciation Depreciation refers to a constant reduction in the cost of an asset. There are two ways…

Q: describe the valuation allowance for deferred tax assets—when it is required and what impact it has…

A: Valuation Allowance: Deferred tax assets should be assessed on every balance sheet date. If it is…

Q: Which travel expenses are deductible and which ones are not? Provide reasons for both deductible and…

A: The travel expenses are costs usually related to the purpose of traveling for business-related…

Q: What is the difference between a future taxable amount and a future deductible amount? When is it…

A:

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

A: In many countries, as per their laws companies are required to maintain two sets of books (Financial…

Q: Temporary differences result in future taxable or deductible amounts when the related asset or…

A: Permanent difference refers to those differences that are caused by transactions and events that…

Q: Assuming all applicable input taxes are to be claimed as credits against output taxes, the VAT…

A: Vat payable is the tax payable which is the indirect tax which is paid to the government, its…

Q: Theoretically, unearned items (deferred revenues) should not be classified as a. deferred credits…

A: Deferred credits: It refers to the money received by a company but not immediately reported as…

Q: hen the temporary differences result to financial income higher than taxable income, they are known…

A: Solution: False. This is because he temporary differences result to financial income higher than…

Q: The following statements are correct, except: a. The amount of percentage tax is based on the gross…

A: Gross receipts are defined as all income, regardless of form, collected or accumulated (in…

Q: How to calculate the answer of Tax Allowable depreciation?

A: Depreciation is the deduction in the value of the asset which leads to deduction in the tax as it is…

Q: Under PFRS 15, when shall a consignor recognize revenue from its consignment sales? A When the…

A: SOLUTION- PERFORMANCE OBLIGATION  IS A PROMISE TO DELIVER THE GOODS OR SERVICES IN LIEU OF PAYMENT…

Q: Describe the method of Accounting for Depreciation and Income Taxes?

A: Generally Accepted Accounting Principles (GAAP): Generally Accepted Accounting Principles are the…

Q: What is generally not a deductible business expense on Schedule C?

A: The sole proprietor type businesses are not allowed to get deduction under Schedule C.

Q: Why do deferred tax assets arise? Explain your answer with suitable example.

A: Item on an organization's monetary record that might be utilized to diminish tax for later are…

Q: Is the following statement is true or false? Amortization is not a payment process.

A: Amortization refers to the process of paying off a debt through scheduled, pre-determined…

Q: How, and why, does the depreciation reported for tax purposes differ from that reported in the…

A: Depreciation is the amount to be written off periodically to charge the decline in value of a fixed…

Q: Describe when and how a valuation allowance is recorded for deferred tax assets.

A: Deferred tax asset: When Income Tax Expense account is more than the Income Tax Payable account,…