Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 17, Problem 1BCC
Scene 1:
The concept of the deferred tax liability (which is reported under both U.S. GAAP and IFRS) has been at the root of disagreement among financial statement users for quite some time While some do believe that it is truly a liability, others do not The following is an excerpt from “The Valuation of
Financial statement users often disagree as to the most appropriate method for valuing a firm that has
Others argue that many deferred tax liabilities (e g , deferred taxes resulting from
Read paragraphs 75 through 79 in the BCs of FASB’s Statement of Financial Accounting Standards No 109, “Income Taxes” Does the FASB believe that the deferred tax liability is really a liability? How does it support this position?
Scene 2:
Do you agree with the FASB’s position and its supporting arguments? Please explain and support your position
Do you agree with the FASB's position and its supporting arguments'? Please explain and support your position
Scene 3: IFRS
Consistent with the discussion above, some financial statement users believe that the deferred tax liability account should be discounted, or that a partial interperiod tax allocation method should be allowed Read International Accounting Standard 12, “Income Taxes” paragraphs 16, 53 and 54 Also, read paragraphs 198, 199, 203, 204 and 205 in the BCs of FASB's Statement of Financial Accounting Standards No 109, “Income Taxes.”
- a. Do the boards allow deferred tax liabilities to be discounted?
- b. Do the boards allow the use of a partial interperiod allocation method?
- c. How do the boards support their position on discounting?
- d. How does the FASB support its position related to interperiod tax allocation?
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One of the longest debates in accounting history is the issue of deferred taxes. The controversy began in the 1940s and has continued, even after the FASB issued Statement of Financial Accounting Standards No. 109 [FASB ASC 740: Income Taxes] in 1992. At issue is the appropriate treatment of tax consequences of economic events that occur in years other than that of the events themselves. Required: 1. Distinguish between temporary differences and permanent differences. Provide an example of each. 2. Distinguish between intraperiod tax allocation and interperiod tax allocation (deferred tax accounting). Provide an example of each. 3. How are deferred tax assets and deferred tax liabilities classified and reported in the financial statements?
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?
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FASB ASC
1. Which of the following statements is incorrect regarding deferred taxes?
a. Income tax payable plus or minus the change in deferred income taxes equals total income tax expense.
b. The deferred portion of income tax expense is the amount of change in deferred taxes related to the current period.
c. In computing income tax expense, a company deducts an increase in a deferred tax liability to income tax payable.
d. All of the choices are incorrect.
2. A liability in 2021 is reported for financial reporting purposes but not for tax purposes. When this liability is settled in 2022, a future taxable amount will:
a. pretax financial income will exceed taxable income in 2022.
b. the Company will record a decrease in a deferred tax liability in 2022.
c. total income tax expense for 2022 will exceed current tax expense for 2022.
d. will not be affected.
3. Assuming a 35% statutory tax rate applies to all years involved, which of the following situations will give rise to reporting a…
Chapter 17 Solutions
Intermediate Accounting
Ch. 17 - Prob. 17.1QCh. 17 - When will income tax expense and income taxes...Ch. 17 - Will permanent differences cause the effective tax...Ch. 17 - When do permanent differences arise?Ch. 17 - How are deferred tax assets and deferred tax...Ch. 17 - Prob. 17.6QCh. 17 - Prob. 17.7QCh. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - How does a firm determine the need for a valuation...
Ch. 17 - Prob. 17.11QCh. 17 - Prob. 17.12QCh. 17 - Prob. 17.13QCh. 17 - How does an entity account for uncertain tax...Ch. 17 - Prob. 17.15QCh. 17 - Prob. 17.16QCh. 17 - Do U.S. GAAP and IFRS classify deferred tax...Ch. 17 - Prob. 17.18QCh. 17 - Cavan Company prepared the following...Ch. 17 - Prob. 17.2MCCh. 17 - Prob. 17.3MCCh. 17 - Prob. 17.4MCCh. 17 - Prob. 17.5MCCh. 17 - Prob. 17.6MCCh. 17 - Prob. 17.7MCCh. 17 - Prob. 17.1BECh. 17 - Income Taxes Payable. Limmox Company has...Ch. 17 - Permanent Differences. Simmox Company's income...Ch. 17 - Permanent Differences. Plimmox Company's income...Ch. 17 - Permanent Differences, Reconciliation of Statutory...Ch. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Temporary Differences, Deferred Tax Liability....Ch. 17 - Temporary Differences. Deferred Tax Asset....Ch. 17 - Temporary Differences, Deferred Tax Asset. Using...Ch. 17 - Prob. 17.14BECh. 17 - Realizability of Deferred Assets. Maves, Inc....Ch. 17 - Prob. 17.16BECh. 17 - Prob. 17.17BECh. 17 - Prob. 17.18BECh. 17 - Prob. 17.19BECh. 17 - Prob. 17.20BECh. 17 - Prob. 17.21BECh. 17 - Prob. 17.22BECh. 17 - Prob. 17.23BECh. 17 - Prob. 17.24BECh. 17 - Prob. 17.25BECh. 17 - Prob. 17.26BECh. 17 - Prob. 17.27BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Change in Tax Rates, Permanent Difference,...Ch. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - Net Operating Loss, Carryback. Phlash Photo Labs,...Ch. 17 - Net Operating Loss, Carryforward. Loggins Lumber...Ch. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Net Operating Loss, Carryforward, Tax Rate Change....Ch. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Uncertain Tax Positions. Lewis Eagle Corporation...Ch. 17 - Uncertain Tax Positions. Based on the information...Ch. 17 - Prob. 17.21ECh. 17 - Prob. 17.1PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.3PCh. 17 - Prob. 17.4PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.6PCh. 17 - Prob. 17.7PCh. 17 - Prob. 17.8PCh. 17 - Prob. 17.9PCh. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Permanent Differences, Temporary Tax Differences,...Ch. 17 - Prob. 1JCCh. 17 - Prob. 2JCCh. 17 - Prob. 1FSACCh. 17 - Prob. 1SSCCh. 17 - Prob. 2SSCCh. 17 - Prob. 3SSCCh. 17 - Scene 1: The concept of the deferred tax liability...Ch. 17 - Basis for Conclusions Case 2: Uncertain Tax...
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