Exam 13: Income Tax Reporting

A company reported income taxes payable of $79,500,an increase in deferred tax assets of $7,900,and an increase in deferred tax liabilities of $19,750;therefore book income tax expense equals $91,350.

The allocation of income tax expense across periods when book and tax income differ is called

A temporary difference created this year causes book income to be greater than taxable income;in future years book income will be less than taxable income.The temporary difference in the future years' incomes is referred to as

When depreciable assets are sold,the change in the deferred tax liability balance for depreciation reflects only current period book-versus-tax depreciation differences.

Analysts can use the deferred tax portion of the income tax note to the financial statements to undo differences in financial reporting choices across firms and thereby

During its first year of operations a company recorded accrued expenses totaling $375,000 for book purposes.For tax purposes,$175,000 of the expenses are deductible during the first year of operations and $200,000 are deductible during the second year of operations.The enacted income tax rate was 40% during the first year of operations and 45% during the second year of operations.The balance sheet at the end of the first year of operations will report a deferred tax

Taylor Company began manufacturing operations on January 2, 2015. During 2015 Taylor earned pre-tax book income of $150,000 and had taxable income of $200,000. Taylor had a temporary difference relating to accrued product warranty costs that are expected to be paid as follows: 2016 \ 30,000 2017 \ 15,000 2018 \ 5,000 -The enacted tax rates are 30% for 2015 and 2016;and 40% for 2017 and 2018.The deferred tax asset at the end of 2015 is

The journal entry to record the taxes for Sand Company at December 31,2015 would be

The accounting principle violated if temporary differences are not taken into account is the

Which of the following statements does not accurately describe the accounting for net operating losses?

Creation of the deferred tax asset valuation allowance account is subjective and therefore provides management the opportunity to manipulate income.

A deferred tax asset can be fully recognized without adjustment if management believes that the probability of future taxable income sufficient to fully realize the deferred tax asset is greater than 50%.

Statutory depletion in excess of cost depletion is an example of a permanent difference.

A corporation that incurs a pre-tax operating loss must

The two broad categories of differences that result from determining financial income and taxable income are

An analyst has reviewed Blunt Company's note disclosures for its deferred taxes and noted a large increase in Blunt's deferred tax liability.This increase could be caused by

Under IFRS deferred tax assets are recognized only to the extent it is deemed probable that they will be realized.

When tax expense equals current taxes payable to the IRS plus (minus)the increase (decrease)in deferred tax liabilities,tax expense is properly matched for the

The allocation of the tax cost (benefit)across various components of book income within a given period is called

An accrual of warranty expense for book income calculations this year creates a deferred tax liability in the balance sheet.