Exam 13: Income Tax Reporting

When the income tax rate changes,the full change in the amount of future liability for income taxes is recognized as a change to income tax expense in the year that the change is enacted.

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 -If Taylor paid no estimated taxes,the income tax payable at the end of 2015 is

During its first year of operations a company recorded accrued warranty expense totaling $75,000 for book purposes.For tax purposes,$25,000 of the expenses are deductible during the first year of operations and $50,000 are deductible during the second year of operations.Book income from operations during the first year was $750,000.The enacted income tax rate was 40% during the first year of operations and 45% during the second year of operations.The income tax expense to be reported in the income statement for the first year of operations is

The note disclosure containing the reconciliation of the statutory tax rate to the effective tax rate

Under IFRS,deferred taxes

Stone Company reported pre-tax book income of $700,000 for book purposes in 2015, the first year of operation. The tax depreciation exceeded its book depreciation by $90,000. The tax rate for 2015 and all future years was 30%. -If Stone paid no estimated taxes,what amount of income taxes payable should Stone report in its December 31,2015,balance sheet?

Stone Company reported pre-tax book income of $700,000 for book purposes in 2015, the first year of operation. The tax depreciation exceeded its book depreciation by $90,000. The tax rate for 2015 and all future years was 30%. -What amount of deferred income tax liability should Stone report in its December 31,2015,balance sheet?

Taxable income is governed by the doctrine of constructive receipt or ability to pay.

Which of the following transactions would not create a temporary difference?

Book income does not correspond with taxable income because of different underlying objectives with respect to income measurement.

A temporary difference that causes book income to be greater than or less than taxable income when it is initially recorded is a/an

During its first three years of operations a company reported income before taxes of $1,000,000 in year 1, ($1,800,000) in year 2, and $3,000,000 in year 3. The income tax rate applicable to each of the years was 40%. Assume that there weren't any temporary differences and a valuation allowance was not necessary. -What is the amount of the deferred income tax asset reported in the year 2 year-end balance sheet if the company elected a loss carryback?

Increases in deferred income tax liability balances represent a potential

If a deferred tax asset may not be fully realized in future periods,a valuation allowance is required to reduce the deferred tax asset to the amount that is more likely than not to be realized.

An expense that enters into the determination of book income but never affects taxable income is referred to as a permanent difference.

Which of the following transactions would not create a temporary difference?

Both IFRS and U.S.GAAP require that a valuation allowance when it is deemed more likely than not (greater than 50% likelihood)that the deferred tax asset will not be realized.

Which of the following statements does not correctly describe required income tax disclosures in the notes to the financial statements?

Book income tax expense could equal current taxes payable to the IRS plus the increase in deferred tax liabilities minus the increase in deferred tax assets.

Temporary differences this year that will cause taxable income to be higher than book income give rise to a deferred tax asset.