Concept explainers
Introduction: To operate a business, a taxpayer generally chooses between individual trading,
To choose: The item that will not appear on M-1 reconciliation.
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Chapter 11 Solutions
Cengagenowv2 For Whittenburg/altus-buller/gill's Income Tax Fundamentals 2020, 1 Term Printed Access Card
- Which of the following should be considered as nonmonetary? Group of answer choices Taxes payable Accrued expense and other payables Trade receivables Deferred tax liabilitiesarrow_forwardDefinitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. Code Letter Term Code Letter Term A. Future deductible amount H Deferred tax consequences B Income tax payable (or refund) I Future taxable amount Operating loss carryback Deferred tax liability D Valuation allowance K Temporary difference E Deferred tax asset Income tax expense (or benefit) F Operating loss carryforward M Deferred tax expense (or benefit) Taxable income Required: Indicate which term belongs with each definition by choosing the correct term. 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 X 3. Temporaryā¦arrow_forwardClassify 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 Interest earned on investments in tax-exempt government securities. Interest earned on deposits with bank. Excess of profit earned over the profit reported under the installment method for income tax purposes.arrow_forward
- Which of the following types of expenses is deductible? Group of answer choices Ā A.Bribes & Illegal Kickbacks B.Expenses related to Tax-Exempt Income C.Political Contributions D.Contingency Attorney Feesarrow_forwardWhich of the following cases would result to a Deferred Tax Asset?I ā Tax Revenues < Accounting Revenues II ā Tax Revenues > Accounting RevenuesIII ā Tax Deductions < Accounting Expenses IV ā Tax Deductions > Accounting Expenses II and IV I and III II and III I and IVarrow_forwardDifference between tax deduction and tax credit. Give example of each. Some tax credits are referred to as refundable. What does this mean? Declining balance method of CCA?arrow_forward
- Which of the following causes a temporary difference between taxable and pretax accounting income? A. Investment expenses incurred to generate tax-exempt income. B. MACRS used for depreciating equipment. C. The dividends received deduction. D. Life insurance proceeds received due to the death of an executive.arrow_forward1. The amount of income taxes that relate to financial income subject to tax is reported on the income statement as A. long-term deferred income taxes (credit) C. income tax expense B. current deferred income taxes (debit) D. income tax payable 2. An item that would create a permanent difference in pretax financial and taxable income would be A. using accelerated depreciation for tax purposes & straight line depreciation for book purposes. B. using the percentage of completion method on long-term construction contracts. C. purchasing equipment previously leased with an operating lease in prior years. D. paying fines for violation of laws. 3. Which of the following is the most likely item to result in a deferred tax asset? A. using completed contract method of recognizing construction revenue tax purposes, but using percentage of completion method for financial reporting purposes. B. using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes.ā¦arrow_forwardWhich of the following taxes isĀ notĀ deductible as an itemized deduction? a.Sales tax in a state with no income tax b.State income tax c.Federal income tax d.Property tax on second residencearrow_forward
- Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax asset? Multiple Choice O O Tax depreciation in excess of book depreciation Revenue collected in advance The installment sales method for tax purposes None of these answer choices are correct.arrow_forwardWhich of the following statements is / are correct?1. Some tax credits are refundable.2. Some tax credits are nonrefundable.a. 1 only.b. 2 only.c. Both 1 and 2.d. Neither 1 nor 2.arrow_forwardWhich of the following is deducted from the financial income in computing for the taxable income? Excess of accounting depreciation from the allowed tax deduction Donations received during the year Penalties paid for late filing of tax returns Unrealized losses from FA@FVTOCIarrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
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