FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Accounting for Income Taxes

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Essay

Review LaterAdd Note

Review Later

What argument serves as the basis for the FASB's requirement that deferred taxes should be recognized for all temporary differences?

Correct Answer

verified

The FASB argues that all deferred tax ac...

View Answer

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

How should Hobson International report tax on the extraordinary item?

A) A tax receivable of $12 million in the balance sheet.
B) A tax benefit of $12 million to net against the $30 million pretax loss.
C) A deferred tax asset of $12 million in the balance sheet.
D) None of these.The extraordinary loss is reported in the income statement net of $12 tax benefit [$30 ($30 40%) = $18].

E) C) and D)
F) A) and B)

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

On its tax return at the end of the current year Webnet Inc. has $6 million of tax depreciation in excess of depreciation in its income statement. A footnote reveals that $1 million of the $6 million difference will reverse itself next year, and the remainder will reverse over the next 4 years. In the absence of other temporary differences, in the balance sheet at the end of the current year Webnet would report:

The valuation allowance account that is used in conjunction with deferred taxes relates:

Using straight-line depreciation for financial reporting purposes and MACRS for tax purposes in the first year of an asset's life creates a:

The classification of deferred tax assets is sometimes dependent on when the benefit will be realized.

Of the following temporary differences, which one ordinarily creates a deferred tax asset?

Financial statement disclosure of the components of income tax expense:

Franklin's taxable income ($ in millions) is:

In reconciling net income to taxable income, interest earned on municipal bonds is:

For its first year of operations Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Tringali's tax rate is 40%. What should Tringali report as its income tax expense for its first year of operations?

Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax liability?

For the current year ($ in millions) , Centipede Corp. had $80 in pretax accounting income. This included bad debt expense of $6 based on the allowance method, and $20 in depreciation expense. Two million in receivables were written off as uncollectible, and MACRS depreciation amounted to $35. In the absence of other temporary or permanent differences, what was Centipede's income tax payable currently, assuming a tax rate of 40%?

Sometimes a temporary difference will produce future deductible amounts. Explain what is meant by future deductible amounts. Describe at least one situation that has this effect. How are future deductible amounts recognized in the financial statements?

In its first three years of operations Sharp Chairs reported the following operating income (loss) amounts: There were no deferred income taxes in any year. In 2008, Sharp elected to carry back its operating loss. The enacted income tax rate was 35% in 2007 and 40% thereafter. In its 2009 balance sheet, what amount should Sharp report as current income tax payable?

Ignoring operating expenses, what deferred tax liability would Isaac report in its year-end 2009 balance sheet?

Which of the following circumstances creates a future taxable amount?

At the end of the preceding year, World Industries had a deferred tax asset of $17,500,000 attributable to its only temporary difference of $50,000,000 for estimated expenses. At the end of the current year, the temporary difference is $45,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, World Industries now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,000,000 for the current year and the tax rate is 30% for all years. Required: Prepare journal entries to record World Industries' income tax expense for the current year. Show well-labeled supporting computations for each component of the journal entries.

Giada Foods reported $940 million in income before income taxes for 2009, its first year of operations. Tax depreciation exceeded depreciation for financial reporting purposes by $100 million. The company also had non-tax-deductible expenses of $80 million relating to non-temporary differences. The income tax rate for 2009 was 35%, but the enacted rate for years after 2009 is 40%. The balance in the deferred tax liability in the December 31, 2009, balance sheet is:

How much tax on income from continuing operations would be reported in Hobson's income statement?