Exam 8: Accounting for Income Taxes

A company had taxable income of $2 million in fiscal 2020 and paid taxes of .7 million; the company incurred a loss of $8 million in fiscal 2021 when the tax rate is 50%. How much refund is the company entitled to?

Which statement is correct?

Why does the tax system appear to treat profits and losses asymmetrically?

Summarize the IFRS rules for presentation and disclosure of taxes on discontinued operations and comprehensive income.

Compare and contrast the two tax allocation methods.

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 30%. Required: Provide the journal entry to reflect the tax rate change.

Which statement is true?

What is the accepted method of accounting for taxes under IFRS and ASPE? Accrual method or taxes payable method?

Under ASPE, Section 3465 indicates less onerous disclosures as private enterprises are permitted to use the tax payable method. Summarize the rules covering presentation and disclosure of the following items according to ASPE using the following template:

A company has income before tax of $200,000. The company also has a temporary difference of $80,000 relating to capital cost allowance (CCA)in excess of depreciation expense recorded for the year. There are no other permanent or temporary differences. The income tax rate is 40%. Required: Compute the amount of taxes payable and income tax expense.

The following information relates to the accounting income for Withering Press Company (WPC)for the current year ended December 31. Income before taxes \ 300,000 Dividend income - nontaxable 20,000 Depreciation 120,000 CCA 100,000 Impairment (æe additional info below) 150,000 Taxrate 40\% The company had purchased land some years ago for $600,000. Recently, it was discovered that this land is contaminated by industrial pollution. Because of the soil remediation costs required, the value of the land has decreased. For tax purposes, the impairment loss is not currently deductible. In the future when the land is sold, half of any losses is deductible against taxable capital gains (ie., the other half that is not taxable or deductible is a permanent difference). The deferred income tax liability account on January 1 had a credit balance of $45,000. This balance is entirely related to property, plant, and equipment (PPE). Required: Prepare the journal entries to record income taxes for WPC.

A company has a deferred tax liability of $120,000 at the beginning of the fiscal year relating to a taxable temporary difference of $300,000. The current year tax rate is 20%. Required: Provide the journal entry to reflect the tax rate change.

A company earns $390,000 in pre-tax income, while its tax return shows taxable income of $280,000. At a tax rate of 35%, how much is the income tax expense under the taxes payable method permitted under ASPE?

Which statement is true?

In the first two years of operations, a company reports taxable income of $115,000 and $165,000, respectively. In the first two years, the tax rates were 38% and 32% respectively. It is now the end of the third year, and the company has a loss of $160,000 for tax purposes. The company carries losses to the earliest year possible. The tax rate is currently 25%. Required: a. How much tax was paid in year 1 and year 2? b. Compute the amount of income tax payable or receivable in the current (third)year.

Which is correct regarding the effect of tax rate changes on income tax expense, assets and liabilities?

Which of the following is true?

A company has income before tax of $350,000, which includes a permanent difference of $65,000 relating to non-taxable dividend income. There are no other permanent or temporary differences. The income tax rate is 45%. The taxes payable are:

A company had taxable income of $12 million in fiscal 2019 and paid taxes of 4.8 million; the company incurred a loss of $7 million in fiscal 2020 when the tax rate is 50%. How much refund is the company entitled to?

Which method does not use "temporary differences" to account for income tax expense?