Question 1

A change in tax rates does not require any change in the carrying amount of deferred tax assets and deferred tax liabilities.

Accepted Answer

A) True 
 B)False  False

Question 2

Profit for taxation purposes is determined in accordance with IAS 12.

Accepted Answer

A) True 
 B)False  False

Question 3

What is the accounting treatment for goodwill that is consistent with IAS 12 Income Taxes?

Accepted Answer

A) treated as a deductible expense in the year of recognition 
B) treated as a non-deductible expense in the year of recognition and subsequent periods 
C) the difference between the carrying amount and the tax base results to a taxable temporary difference 
D) the difference between the carrying amount and the tax base results to a deductible temporary difference 
A) treated as a deductible expense in the year of recognition 
B) treated as a non-deductible expense in the year of recognition and subsequent periods 
C) the difference between the carrying amount and the tax base results to a taxable temporary difference 
D) the difference between the carrying amount and the tax base results to a deductible temporary difference B

Question 4

The criterion for recognising a deferred tax asset is that:

Accepted Answer

A) it should be fully recognised if it is probable that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised. 
B) it should be recognised if it is possible that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised. 
C) it should be recognised to the extent, and only to the extent, that it is possible that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised. 
D) it should be recognised to the extent, and only to the extent, that it is probable that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised. 
A) it should be fully recognised if it is probable that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised. 
B) it should be recognised if it is possible that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised. 
C) it should be recognised to the extent, and only to the extent, that it is possible that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised. 
D) it should be recognised to the extent, and only to the extent, that it is probable that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised.

Question 5

Explain,with examples,how changes in tax rates affect pre-existing deferred tax asset and deferred tax liability balances.

Accepted Answer

Across time it is likely that government

Question 6

When the carrying amount of an asset exceeds the tax base,there will be a deferred tax ,because the taxation payments have effectively been .

Accepted Answer

A) asset; made in advance of recognising the expense 
B) asset; deferred to future periods 
C) liability; made in advance of recognising the expense 
D) liability; deferred to future periods 
A) asset; made in advance of recognising the expense 
B) asset; deferred to future periods 
C) liability; made in advance of recognising the expense 
D) liability; deferred to future periods

Question 7

Discuss the criteria for recognising deferred tax assets when there are unused tax losses?

Accepted Answer

Consistent with the test for deferred ta

Question 8

A taxable temporary difference is one that will result in:

Accepted Answer

A) an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
B) a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
C) an increase in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
D) a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled and an increase in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
A) an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
B) a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
C) an increase in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
D) a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled and an increase in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.

Question 9

A deductible temporary difference is one that will result in:

Accepted Answer

A) a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
B) an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
C) a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled, and an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
D) a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
A) a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
B) an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
C) a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled, and an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled. 
D) a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.

Question 10

Under the approach of IAS 12 to accounting for income taxes,a deductible temporary difference creates which account?

Accepted Answer

A) deferred tax revenue 
B) deferred tax liability 
C) deferred tax asset 
D) provision for tax payable 
A) deferred tax revenue 
B) deferred tax liability 
C) deferred tax asset 
D) provision for tax payable

Question 11

The reversal of deductible temporary differences results in deductions in determining the:

Accepted Answer

A) income tax expense 
B) future taxable profits 
C) carrying amounts 
D) income tax payable 
A) income tax expense 
B) future taxable profits 
C) carrying amounts 
D) income tax payable

Question 12

Discuss the conditions that must be met to allow the set-off of current assets and current tax liabilities.

Accepted Answer

In relation to the set-off of current ta

Question 13

Which of the following statements is not correct in relation to tax rate changes?

Accepted Answer

A) An increase in tax rates will create an expense where an entity has deferred tax liabilities. 
B) Across time it is likely that governments will change tax rates. 
C) A decrease in tax rates will create an income where an entity has deferred tax assets. 
D) Changes in tax rates will have implications for the value attributed to pre-existing deferred tax assets. 
A) An increase in tax rates will create an expense where an entity has deferred tax liabilities. 
B) Across time it is likely that governments will change tax rates. 
C) A decrease in tax rates will create an income where an entity has deferred tax assets. 
D) Changes in tax rates will have implications for the value attributed to pre-existing deferred tax assets.

Question 14

The tax base of revenue received in advance is equal to zero where the revenue received is taxed in the reporting period that the revenue is received.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is correct with respect to AIS 12 Income Taxes when a non-current asset is revalued?

Accepted Answer

A) On revaluation date, the revaluation reserve is increased by the product of the temporary difference and the tax rate. 
B) On revaluation date, the revaluation reserve is decreased by the product of the temporary difference and the tax rate. 
C) On revaluation date, a deferred tax liability is created equal to the amount of the temporary difference. 
D) On revaluation date, a deferred tax asset is created equal to the amount of the temporary difference. 
A) On revaluation date, the revaluation reserve is increased by the product of the temporary difference and the tax rate. 
B) On revaluation date, the revaluation reserve is decreased by the product of the temporary difference and the tax rate. 
C) On revaluation date, a deferred tax liability is created equal to the amount of the temporary difference. 
D) On revaluation date, a deferred tax asset is created equal to the amount of the temporary difference.

Question 16

Deferred tax assets are the amounts of income taxes recoverable in future periods that arise from assessable temporary differences.

Accepted Answer

A) True 
 B)False

Question 17

Sinfonia Plc made credit sales for this period of €100 000.The allowance for doubtful debts for these sales is €3000.For taxation purposes the amount provided for doubtful debts is not tax-deductible and the taxation office has included the €100 000 in taxable income.The tax rate is 30%.What is the deferral arising from this situation?

Accepted Answer

A) none 
B) deferred tax liability of €900 
C) deferred tax asset of €900 
D) deferred tax liability of €3000 
A) none 
B) deferred tax liability of €900 
C) deferred tax asset of €900 
D) deferred tax liability of €3000

Question 18

How do deferred tax assets and deferred tax liabilities arise?
 How do you calculate their balances at a point in time?

Accepted Answer

Temporary differences lead to deferred t

Question 19

How do deferred tax assets and deferred tax liabilities arise?
 How do you calculate their balances at a point in time?

Accepted Answer

Temporary differences lead to deferred t

Question 20

Discuss the accounting treatment for the temporary difference that arises from revaluation of non-current assets.

Accepted Answer

IAS 12 requires that,to the extent that

Exam 15: Accounting for Income Taxes

A change in tax rates does not require any change in the carrying amount of deferred tax assets and deferred tax liabilities.

Profit for taxation purposes is determined in accordance with IAS 12.

What is the accounting treatment for goodwill that is consistent with IAS 12 Income Taxes?

The criterion for recognising a deferred tax asset is that:

Explain,with examples,how changes in tax rates affect pre-existing deferred tax asset and deferred tax liability balances.

When the carrying amount of an asset exceeds the tax base,there will be a deferred tax ,because the taxation payments have effectively been .

Discuss the criteria for recognising deferred tax assets when there are unused tax losses?

A taxable temporary difference is one that will result in:

A deductible temporary difference is one that will result in:

Under the approach of IAS 12 to accounting for income taxes,a deductible temporary difference creates which account?

The reversal of deductible temporary differences results in deductions in determining the:

Discuss the conditions that must be met to allow the set-off of current assets and current tax liabilities.

Which of the following statements is not correct in relation to tax rate changes?

The tax base of revenue received in advance is equal to zero where the revenue received is taxed in the reporting period that the revenue is received.

Which of the following statements is correct with respect to AIS 12 Income Taxes when a non-current asset is revalued?

Deferred tax assets are the amounts of income taxes recoverable in future periods that arise from assessable temporary differences.

How do deferred tax assets and deferred tax liabilities arise? How do you calculate their balances at a point in time?

How do deferred tax assets and deferred tax liabilities arise? How do you calculate their balances at a point in time?

Discuss the accounting treatment for the temporary difference that arises from revaluation of non-current assets.

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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