Exam 19: Accounting for Income Taxes

Deferred tax liabilities and deferred tax assets must be reported on the balance sheet. Required: Explain the process of classifying and reporting deferred tax liabilities and deferred tax assets.

The interperiod tax allocation method that is balance-sheet oriented, reports deferred taxes based on the future enacted tax rates, and more closely meets the conceptual definitions of assets and liabilities established by the FASB is the

Temporary differences arise when revenues or gains are included in pretax financial income Prior to the Time After the Time They Are Included in They Are Included Taxable Income in Taxable Income I. Yes Yes II. Yes No III. No Yes IV No No

Current GAAP requires which of the following tax allocation approaches and methods? Approach Method I. partial asset/liability II. comprehensive deferred III. comprehensive asset/liability IV. partial deferred

Which of the following statements regarding current and deferred income taxes is not correct?

In accounting for income taxes, percentage depletion in excess of cost depletion is an example of

For each item listed below, indicate whether it involves a: Required: Match each item to its descriptive phrase by placing the appropriate letter in the space provided.

Temporary differences arise when expenses or losses are deducted to compute taxable income Prior to the Time They After the Time They Are Are Deducted to Compute Deducted to Compute Pretax Financial Income Pretax Fingncial Income I. Yes Yes II. No Yes III. Yes No IV No No

The Brownwood Company reports the following for both pretax financial and taxable income: Brownwood uses the carryback provision for net operating losses when possible.Congress has enacted a tax rate for 2014 and future years of 40%.The entry on December 31, 2013, to record income tax expense would include a

Which of the following transactions would typically result in the creation of a deferred tax liability?

Each of the following can result in a temporary difference between pretax financial income and taxable income except

Harlingen Company reported the following operating results during its first three years of operations: 2010 Pretax operating loss $\quad$$\$ 30,000$ 2011 Pretax operating loss $\quad$$\$ 200,000$ 2012 Pretax operating income $\$ 300,000$ No permanent or temporary differences occurred during these fiscal periods.Assuming an income tax rate of 30%, Harlingen should report a current income tax liability as of December 31, 2012, in the amount of

Income taxes for financial accounting purposes are apportioned to each of the following items except

Revenue from installment sales is recognized in the period received for tax purposes and recognized in the period earned for accounting purposes.If these periods are different, this is an example of a

In applying intraperiod income tax allocation to discontinued operations, extraordinary items, cumulative effects of changes in accounting principles, and prior period adjustments, what tax rate should be used?

Differences between pretax financial accounting and taxable income that are expected to reverse in one or more future accounting periods are called

During its first year of operations ending on December 31, 2010, the Laredo Company reported pretax accounting income of $600, 000.The only difference between taxable income and accounting income was $80, 000 of accrued warranty costs.These warranty costs are expected to be paid as follows: Enacted Year Amount Tax Rate 2010 \ 0 30\% 2011 60,000 35\% 2012 20,000 40\% Assuming an income tax rate of 30% in 2010, Laredo should report income tax expense on its 2010 income statement in the amount of

Which one of the following requires interperiod tax allocation?

Intraperiod tax allocation would be appropriate for