Exam 8: Accounting for Income Taxes

Which statement is correct?

Which statement best describes the "deferral method"?

Summarize the rules covering presentation and disclosure of the following items according to IFRS using the following template: Item Presentation and Disclosure Income Tax Expense Composition of Income Tax Expense Taxes on discontinued operations Comprehensive income Permanent Differences Offsetting Different jurisdiction and component entities According to source Tax losses carried forward

What is an "originating difference"?

What is a "taxable" temporary difference?

GMS Corp. reported $680,000 in income tax expense for the year under the accrual method. Its balance sheet reported an overall increase in deferred income tax liability of $40,000 and a decrease in income tax payable of $50,000. How much would GMS report as income tax expense had it used the taxes payable method?

In the first two years of operations, a company reports taxable income of $200,000 and $250,000, respectively. During these first two years, the tax rates were 30% and 35% respectively. It is now the end of the third year, and the company has a loss of $260,000 for tax purposes. The company carries losses to the earliest year possible. The tax rate is currently 40%. The amount of income tax receivable in the current (third)year is:

What adjustment is required to the opening deferred taxes as a result of the rate change?

A company facing a 45% tax rate has calculated its taxable income for the year to be $2,100,000. It made installment payments during the year totalling $955,000; this amount has been recorded in an asset account as "income tax installments" Required: Prepare the journal entry to record the adjusting entry for income taxes at the end of the year under the taxes payable method.

Which statement is correct?

A company has a deferred tax liability of $60,000 at the beginning of the fiscal year relating to a taxable temporary difference of $300,000. The tax rate for the year increased from 20% to 25%. Required: Provide the journal entry to reflect the tax rate change.

SEG Company reported $490,000 in income tax expense for the year under the accrual method. Its balance sheet reported an overall increase in deferred income tax liability of $20,000 and a decrease in income tax payable of $25,000. How much would SEG report as income tax expense had it used the taxes payable method?

Which statement is accurate?

What is the opening balance of the deferred tax liability account considering the rate change?

Why is it necessary to distinguish permanent differences from temporary differences?

A company has a deferred tax liability of $112,500 at the beginning of the fiscal year relating to a taxable temporary difference of $450,000. The tax rate for the year increased from 25% to 35%. Required: Provide the journal entry to reflect the tax rate change.

A company has a deferred tax liability of $20,000 at the beginning of the fiscal year relating to a taxable temporary difference of $80,000. The current year tax rate is 20%. Required: Provide the journal entry to reflect the tax rate change.

A company had taxable income of $2 million in fiscal 2020 and paid taxes of 0.6 million; the company incurred a loss of $7 million in fiscal 2021 when the tax rate is 50%. How much refund is the company entitled to?

The following summarizes information relating to Gonzalez Corporation's operations for the current year. Required: Compute the amount of taxes payable and income tax expense for Gonzalez Corporation.