Question 1

List five items that are temporary differences.

Accepted Answer

1.depreciation for accounting purposes,

Question 2

Financial analysts tend to ignore deferred taxes when computing the effective tax rate.

Accepted Answer

A) True 
 B)False

Question 3

Explain the income tax disclosures required by the IASB.

Accepted Answer

i)The amount of income tax expense (or b

Question 4

JMR Corporation has one asset worth $350,000.Depreciation accumulated to date is $200,000 and accumulated CCA is $230,000.Assuming the tax rate is 40% what is the income tax implication?

Accepted Answer

A) A Deferred income tax liability of $12,000 
B) A Deferred income tax asset of $30,000 
C) A Deferred income tax asset of $12,000 
D) A Deferred income tax liability of $30,000 
A) A Deferred income tax liability of $12,000 
B) A Deferred income tax asset of $30,000 
C) A Deferred income tax asset of $12,000 
D) A Deferred income tax liability of $30,000

Question 5

Under IFRS, the amount of taxes paid must be disclosed on the face of the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 6

Which tax rate should be used to measure a deferred income tax asset or liability?

Accepted Answer

The substantially enacted tax

Question 7

OCI elements are shown on the statement of comprehensive income on a pre-tax basis.

Accepted Answer

A) True 
 B)False

Question 8

The term "taxable amount" includes:

Accepted Answer

A) Revenues that are included in the tax return BEFORE they are recognized for accounting purposes. 
B) Warranty deductions for accounting purposes. 
C) Gains that are included in the tax return AFTER they are recognized for accounting purposes. 
D) Losses that are included in the tax return AFTER they are recognized for accounting purposes. 
A) Revenues that are included in the tax return BEFORE they are recognized for accounting purposes. 
B) Warranty deductions for accounting purposes. 
C) Gains that are included in the tax return AFTER they are recognized for accounting purposes. 
D) Losses that are included in the tax return AFTER they are recognized for accounting purposes.

Question 9

Write-downs of inventories under lower of cost and net realizable value rules will trigger a DTL.

Accepted Answer

A) True 
 B)False

Question 10

A firm reported the following in its income statement for the current year: depreciation expense, $4,000; pollution violation fine, $12,000; pre-tax accounting income, $10,000.The tax rate is 40%.For tax purposes, the CCA deduction was $9,000.What amount of deferred income tax (benefit)expense will be recognized for this year? Assume no beginning deferred tax amounts and a constant tax rate of 40%.

Accepted Answer

A) A $2,000 deferred tax benefit. 
B) A $2,000 deferred tax expense. 
C) A $6,800 deferred tax expense. 
D) A $6,800 deferred tax benefit. 
A) A $2,000 deferred tax benefit. 
B) A $2,000 deferred tax expense. 
C) A $6,800 deferred tax expense. 
D) A $6,800 deferred tax benefit.

Question 11

During the originating period of a temporary difference, pre-tax accounting income is defined as taxable income plus taxable amounts minus deductible amounts.

Accepted Answer

A) True 
 B)False

Question 12

The following information is available for Ryan Corporation: Assets at cost-$260,000 (8 year life, straight-line depreciation, no salvage value, purchased 2 years ago); Accumulated depreciation-$65,000.Accumulated CCA-$105,300; CCA rate-30%; meals and entertainment recorded in the books-$12,000; golf dues paid and expensed on the books-$5,000; pre-tax accounting income-$40,000.No CCA was taken during the current year.From the information provided above, what is the total amount of expenses that will never have an effect on taxable income (and thus never trigger any DTA/DTL amounts)?

Accepted Answer

A) $11,000 
B) $17,000 
C) $6,000 
D) $5,000 
A) $11,000 
B) $17,000 
C) $6,000 
D) $5,000

Question 13

If the enacted tax rate is changed for the current and future years, the earnings effect of the change in the beginning balances of the deferred tax assets is recognized in the current year.

Accepted Answer

A) True 
 B)False

Question 14

During 20014, JBC had pre-tax accounting income of $8,400, originating taxable amounts of $4,800 and originating deductible amounts of $2,400.Calculate JBC's taxable income for 2014.

Accepted Answer

$5,000 + $4,000 - $2

Question 15

RG Corporation has a temporary difference of $40,000 in 2014.Its tax rate in 2014 is 40% and the government enacted tax rate known at the end of 2014 for 2000 and subsequent years is 45%.What tax rate should be used to calculate the deferred income tax asset or liability?

Accepted Answer

The enacte

Question 16

Temporary differences can be dealt with in a number of different ways.The method recommended for public companies is the:

Accepted Answer

A) Comprehensive Allocation Method. 
B) Flow-through method 
C) Partial Allocation Method. 
D) Taxes Payable Method. 
A) Comprehensive Allocation Method. 
B) Flow-through method 
C) Partial Allocation Method. 
D) Taxes Payable Method.

Question 17

Which of the following is an example of a temporary difference, which would result in a deferred tax asset?

Accepted Answer

A) Investment losses recognized later for accounting purposes than for tax purposes 
B) Rent revenue collected in advance when included in taxable income before it is included in pre-tax accounting income 
C) Use of a shorter depreciation period for accounting purposes than is used for income tax purposes 
D) Use of straight-line depreciation for accounting purposes and an accelerated rate for income tax purposes 
A) Investment losses recognized later for accounting purposes than for tax purposes 
B) Rent revenue collected in advance when included in taxable income before it is included in pre-tax accounting income 
C) Use of a shorter depreciation period for accounting purposes than is used for income tax purposes 
D) Use of straight-line depreciation for accounting purposes and an accelerated rate for income tax purposes

Question 18

If a company incurs $1,500 of expenditures for meals and entertainment, this amount represents a permanent difference.

Accepted Answer

A) True 
 B)False

Question 19

Company A had depreciation of $14,000 and CCA of $12,500 during its first year of operations.The tax rates for Years 1 and 2 were 25% and 20% respectively.The Year 2 tax rate was enacted in Year 1.At the end of year 1, this will result in:

Accepted Answer

A) a deferred income tax asset of $375. 
B) a deferred income tax liability of $375. 
C) a deferred income tax liability of $300. 
D) a deferred income tax asset of $300. 
A) a deferred income tax asset of $375. 
B) a deferred income tax liability of $375. 
C) a deferred income tax liability of $300. 
D) a deferred income tax asset of $300.

Question 20

Name two conditions necessary for a deferred tax liability to result in an actual cash outflow.

Accepted Answer

i)The asset base must be shrinking (thro

List five items that are temporary differences.

Financial analysts tend to ignore deferred taxes when computing the effective tax rate.

Explain the income tax disclosures required by the IASB.

JMR Corporation has one asset worth $350,000.Depreciation accumulated to date is $200,000 and accumulated CCA is $230,000.Assuming the tax rate is 40% what is the income tax implication?

Under IFRS, the amount of taxes paid must be disclosed on the face of the cash flow statement.

Which tax rate should be used to measure a deferred income tax asset or liability?

OCI elements are shown on the statement of comprehensive income on a pre-tax basis.

The term "taxable amount" includes:

Write-downs of inventories under lower of cost and net realizable value rules will trigger a DTL.

During the originating period of a temporary difference, pre-tax accounting income is defined as taxable income plus taxable amounts minus deductible amounts.

If the enacted tax rate is changed for the current and future years, the earnings effect of the change in the beginning balances of the deferred tax assets is recognized in the current year.

During 20014, JBC had pre-tax accounting income of $8,400, originating taxable amounts of $4,800 and originating deductible amounts of $2,400.Calculate JBC's taxable income for 2014.

RG Corporation has a temporary difference of $40,000 in 2014.Its tax rate in 2014 is 40% and the government enacted tax rate known at the end of 2014 for 2000 and subsequent years is 45%.What tax rate should be used to calculate the deferred income tax asset or liability?

Temporary differences can be dealt with in a number of different ways.The method recommended for public companies is the:

Which of the following is an example of a temporary difference, which would result in a deferred tax asset?

If a company incurs $1,500 of expenditures for meals and entertainment, this amount represents a permanent difference.

Company A had depreciation of $14,000 and CCA of $12,500 during its first year of operations.The tax rates for Years 1 and 2 were 25% and 20% respectively.The Year 2 tax rate was enacted in Year 1.At the end of year 1, this will result in:

Name two conditions necessary for a deferred tax liability to result in an actual cash outflow.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Financial Statement Analysis

Filters

Exam 16: Corporate Income Tax

List five items that are temporary differences.

Financial analysts tend to ignore deferred taxes when computing the effective tax rate.

Explain the income tax disclosures required by the IASB.

JMR Corporation has one asset worth $350,000.Depreciation accumulated to date is $200,000 and accumulated CCA is $230,000.Assuming the tax rate is 40% what is the income tax implication?

Under IFRS, the amount of taxes paid must be disclosed on the face of the cash flow statement.

Which tax rate should be used to measure a deferred income tax asset or liability?

OCI elements are shown on the statement of comprehensive income on a pre-tax basis.

The term "taxable amount" includes:

Write-downs of inventories under lower of cost and net realizable value rules will trigger a DTL.

During the originating period of a temporary difference, pre-tax accounting income is defined as taxable income plus taxable amounts minus deductible amounts.

If the enacted tax rate is changed for the current and future years, the earnings effect of the change in the beginning balances of the deferred tax assets is recognized in the current year.

During 20014, JBC had pre-tax accounting income of $8,400, originating taxable amounts of $4,800 and originating deductible amounts of $2,400.Calculate JBC's taxable income for 2014.

RG Corporation has a temporary difference of $40,000 in 2014.Its tax rate in 2014 is 40% and the government enacted tax rate known at the end of 2014 for 2000 and subsequent years is 45%.What tax rate should be used to calculate the deferred income tax asset or liability?

Temporary differences can be dealt with in a number of different ways.The method recommended for public companies is the:

Which of the following is an example of a temporary difference, which would result in a deferred tax asset?

If a company incurs $1,500 of expenditures for meals and entertainment, this amount represents a permanent difference.

Company A had depreciation of $14,000 and CCA of $12,500 during its first year of operations.The tax rates for Years 1 and 2 were 25% and 20% respectively.The Year 2 tax rate was enacted in Year 1.At the end of year 1, this will result in:

Name two conditions necessary for a deferred tax liability to result in an actual cash outflow.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Financial Statement Analysis

Filters