Exam 13: Income Tax Reporting

Sand engaged in operations at the start of 2015 and reported $550,000 in pre-tax book income for the year. Tax depreciation for Sand exceeded book depreciation by $50,000. The tax rate for 2015 was 30%, and Congress had enacted a tax rate of 20% for the years after 2015. -What is the total tax expense for Sand for 2015?

Uncertain tax positions

Which of the following does not properly describe the comparison of the effective income tax rate and the statutory income tax rate?

Smith Company reported $350,000 in book income before income tax during 2015, its first year of operation. The tax depreciation exceeded its book depreciation by $30,000. The tax rate for 2015 and all future years was 40%. -Income tax expense reported on the income statement for the year ending December 31,2015 would be

Temporary differences that will cause taxable income in future periods to be higher than book income in future periods give rise to

Which of the following statements is not correct?

Financial accounting and reporting for deferred taxes

At December 31,2015,the Rare Corporation reported a $40,000 deferred tax liability pertaining to a $100,000 temporary difference which will reverse equally during the next four years.On December 31,2015,after determining the deferred tax liability,Rare's management was informed that the income tax rate for years subsequent to 2015 had been changed to 42%.As a result of the tax rate change,Rare's 2015 income tax expense will

A revenue included in the determination of book income this year but not included in taxable income until next year is an example of a temporary difference.

Temporary differences that will cause taxable income to be higher than book income in future periods give rise to deferred tax liabilities.

When future income tax rates change,the effect of the change on net income will be consistent across most companies regardless of their deferred tax balances.