Which of the following need not be disclosed in the financial statements or the notes thereto? Possible loss as a result of unspecified business risk Probable losses not reasonably estimable Possible assessments of additional taxes Guarantees of indebtedness of others, outflow of resources is reasonably possible

Which of the following need not be disclosed in the financial statements or the notes thereto? Possible loss as a result of unspecified business risk Probable losses not reasonably estimable Possible assessments of additional taxes Guarantees of indebtedness of others, outflow of resources is reasonably possible

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 1MCQ

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Which of the following may not be an effect of VAT on the accounting records of a company? The formation of a payable under the current liabilities An addition to the cost of a purchase The formation of a tax asset arising from a sale A receivable from the government arising from a sale All of the other choices may be an effect of VAT.
Which of the following may not be an effect of VAT on the accounting records of a company? i. The formation of a payable under the current liabilities ii. An addition to the cost of a purchase iii. The formation of a tax asset arising from a sale iv. A receivable from the government arising from a sale v. All of the other choices may be an effect of VAT.
Which of the following statements about Loss Contingencies is TRUE? According to the practice of accounting conservatism, contingency losses do not have to be accrued until they are confirmed, while contingency gains have to be recorded when the event confirming their receipt is probable. Remote Losses do not require disclosure. According to the U.S. GAAP, a loss contingency must be accrued by a charge to income if any of the two conditions is met: 1) it is probable that an asset has been impaired, or a liability has been incurred at the date of the financial statements; 2) the amount of the loss can be reasonably estimated. If a loss is probable but cannot be estimated, it shall not be disclosed in the financial statements.
How is a business activity distinguished from an investment activity? why is this distinction important for the purpose of calculating federal income taxes? What types of losses may potentially be characterized as passive losses?
What are the short-term effect and the long-term effect of improperly capitalizing expenditures on the financial statements?
What are the possible treatments for tax purposes of anet operating loss? What are the circumstances thatdetermine the option to be applied? What is the propertreatment of a net operating loss for financial reportingpurposes?
If a company has elected the fair value option, where are gains and losses resulting from adjusting these accounts to fair value reported? Group of answer choices Unrealized Gains are reported as part of Other Comprehensive Income while Unrealized losses are reported as part of Net Income. Unrealized Gains and Losses are both reported as part of Net Income. Unrealized Gains are reported as part of Net Income, while Unrealized Losses are reported as part of Other Comprehensive Income. Unrealized Gains and Losses are both reported as part of Other Comprehensive Income.
Which of the following best describes the distinction between expenses and losses? Losses are material items whereas expenses are immaterial items Losses are extraordinary charges whereas expenses are ordinary charges Losses are reported net-of-related-tax effect whereas expenses are not reported not-of- tax Losses results from peripheral or incidental transactions whereas expenses result from ongoing major or central operations of the entity
When accounting standards require an asset to be expensed immediately but tax rulesrequire the item to be capitalized and amortized, the company will most likely record:A . a deferred tax asset.B . a deferred tax liability.C . no deferred tax asset or liability.
Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification. A. Non-deductible expenses B. Non-taxable revenues C. Deductible temporary difference D. Taxable temporary difference Collections of rental in excess of rent revenue reported during the period. Dividends received by a domestic corporation from a domestic corporation. Increase in fair value of equity investments measured at fair value through profit or loss. Uncollectible accounts expense in excess of accounts written off during the period. Tax depreciation in excess of depreciation for accounting purposes.
Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification. A. Non-deductible expenses B. Non-taxable revenues C. Deductible temporary difference D. Taxable temporary difference Collections of rental in excess of rent revenue reported during the period. Dividends received by a domestic corporation from a domestic corporation. Increase in fair value of equity investments measured at fair value through profit or loss.
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.