Question 1

CCA is an optional deduction and may be adjusted downwards in order to create taxable income.

Accepted Answer

A) True 
 B)False

Question 2

KER Corp.incurred a loss in 20x15 after several years of taxable income.After the carry back,KER still had unused losses the amount of $357,000.The applicable tax rate was 40%.In 20x16,the tax rate goes up to 45%.Assuming that losses have not been used but it is still probable that they will be used,prepare the journal entry to set up the deferred benefit in 20x15 and any other entries applicable to the deferred benefit.

Accepted Answer

20x15 @#IMG-DLM& 
(357,000 * .

Question 3

JMR Corporation suffered a loss in 2013.As a result,the Corporation has an $87,000 accumulated tax loss carry forward.The current tax rate is 40%.The benefit was recorded in the accounts,as JMR believed it was more likely than not to be realized.In 2014 the tax rate goes down to 38% and JMR has not yet used the benefit.Which of the following statements is true?

Accepted Answer

A)  No change to the accounts is necessary 
B)  Income tax expense should be increased by $1,740 
C)  Deferred income tax asset-benefit should be increased by $1,740 
D)  Deferred income tax asset-benefit will not change 
A)  No change to the accounts is necessary 
B)  Income tax expense should be increased by $1,740 
C)  Deferred income tax asset-benefit should be increased by $1,740 
D)  Deferred income tax asset-benefit will not change

Question 4

JG Ltd.has been in business for five years and incurs a loss of $520,000 in 20x15.The company has no temporary differences.The history of the company's earnings since they began operations is as follows:  
 The tax rate has been constant at 38%.
Required:
Prepare journal entries to record the recovery of taxes and any journal entries necessary for any loss carry forwards.Assume probability of recovery is greater than 50%

Accepted Answer

20x15 @#IMG-DLM&
 (410,000 * .

Question 5

The maximum number of years a tax loss can be carried forward is:

Accepted Answer

A)  3 years. 
B)  20 years. 
C)  10 years. 
D)  17 years. 
A)  3 years. 
B)  20 years. 
C)  10 years. 
D)  17 years.

Question 6

If a corporation incurs a taxable loss,they are entitled to carry the loss back for three years or forward for twenty years.

Accepted Answer

A) True 
 B)False

Question 7

Choose the best statement with respect to tax rates.

Accepted Answer

A)  The tax rate used to record a deferred income tax asset or liability should be the enacted tax rate at the beginning of the year. 
B)  The current tax rate should be used to record a deferred income tax asset or liability. 
C)  The projected tax rate should be used to record a deferred income tax asset or liability. 
D)  Once recorded, the deferred income tax asset must be maintained at a rate expected to be in effect when the carry forward is utilized. 
A)  The tax rate used to record a deferred income tax asset or liability should be the enacted tax rate at the beginning of the year. 
B)  The current tax rate should be used to record a deferred income tax asset or liability. 
C)  The projected tax rate should be used to record a deferred income tax asset or liability. 
D)  Once recorded, the deferred income tax asset must be maintained at a rate expected to be in effect when the carry forward is utilized.

Question 8

Taxes are recovered at the tax rate in effect during the year of the loss.

Accepted Answer

A) True 
 B)False

Question 9

Choose the best statement with respect to tax rates.

Accepted Answer

A)  The tax rate used to record a deferred income tax asset or liability should be the enacted tax rate at the balance sheet date. 
B)  The current tax rate should be used to record a deferred income tax asset or liability. 
C)  The projected tax rate should be used to record a deferred income tax asset or liability. 
D)  None of these answers are correct. 
A)  The tax rate used to record a deferred income tax asset or liability should be the enacted tax rate at the balance sheet date. 
B)  The current tax rate should be used to record a deferred income tax asset or liability. 
C)  The projected tax rate should be used to record a deferred income tax asset or liability. 
D)  None of these answers are correct.

Question 10

Carry back and carry forward procedures for temporary differences are always applied,even when there are no temporary differences for deductible items,and there are no current income taxes payable.

Accepted Answer

A) True 
 B)False

Question 11

VB Ltd.provided you with the following information:   There are no temporary differences.The deferred income tax benefit of the loss carry forward was set up in 2015 as the probability of realization was greater than 50%.In 2016 it was determined that the probability of realization was less than 50%.What would be the carrying amount of the deferred income tax benefit-loss carry forward on the balance sheet at the end of 2016?

Accepted Answer

A)  $194,100 
B)  $0 
C)  $220,000 
D)  $64,600 
A)  $194,100 
B)  $0 
C)  $220,000 
D)  $64,600

Question 12

What factor would most likely cause a firm to choose the carry forward only option for a net operating loss?

Accepted Answer

A)  Expectations of lower earnings in the future relative to the past. 
B)  Expectations of higher earnings in the future relative to the past. 
C)  Expectations of lower tax rates in the future relative to the past. 
D)  Expectations of higher tax rates in the future relative to the past. 
A)  Expectations of lower earnings in the future relative to the past. 
B)  Expectations of higher earnings in the future relative to the past. 
C)  Expectations of lower tax rates in the future relative to the past. 
D)  Expectations of higher tax rates in the future relative to the past.

Question 13

If a potential benefit of a loss carry forward that was previously determined to meet the more likely than not criteria has now been determined not to meet the criteria,it should be reversed.

Accepted Answer

A) True 
 B)False

Question 14

What options are open to a company that did not previously set up a deferred income tax benefit of a tax loss carry forward but has now determined that the probability of realization is greater than 50%?

Accepted Answer

Companies may continue to adju

Question 15

Once a deferred benefit of a tax loss carry forward has been recorded,does it have to remain on the balance sheet until realized? Explain.

Accepted Answer

The deferred benefit should be analyzed

Question 16

In order to help companies and their auditors determine whether the criteria "more likely than not" has been realized,IAS 12 has set out some guidelines for unfavourable evidence.List two of these.

Accepted Answer

1.A history of tax losses expiring befor

Question 17

The following information for LAS Corporation is available:   LAS applies its tax losses sequentially,that is,tax losses are carried back as far as possible.The taxes recovered for the year ended 2014 amounted to:

Accepted Answer

A)  $46,600. 
B)  $0. 
C)  $52,660. 
D)  $43,750. 
A)  $46,600. 
B)  $0. 
C)  $52,660. 
D)  $43,750.

Question 18

Once it is deemed that a potential benefit of a loss carry forward does not meet the more likely than not criteria,the benefit may not be recognized.

Accepted Answer

A) True 
 B)False

CCA is an optional deduction and may be adjusted downwards in order to create taxable income.

The maximum number of years a tax loss can be carried forward is:

If a corporation incurs a taxable loss,they are entitled to carry the loss back for three years or forward for twenty years.

Choose the best statement with respect to tax rates.

Taxes are recovered at the tax rate in effect during the year of the loss.

Choose the best statement with respect to tax rates.

Carry back and carry forward procedures for temporary differences are always applied,even when there are no temporary differences for deductible items,and there are no current income taxes payable.

What factor would most likely cause a firm to choose the carry forward only option for a net operating loss?

If a potential benefit of a loss carry forward that was previously determined to meet the more likely than not criteria has now been determined not to meet the criteria,it should be reversed.

What options are open to a company that did not previously set up a deferred income tax benefit of a tax loss carry forward but has now determined that the probability of realization is greater than 50%?

Once a deferred benefit of a tax loss carry forward has been recorded,does it have to remain on the balance sheet until realized? Explain.

In order to help companies and their auditors determine whether the criteria "more likely than not" has been realized,IAS 12 has set out some guidelines for unfavourable evidence.List two of these.

The following information for LAS Corporation is available: LAS applies its tax losses sequentially,that is,tax losses are carried back as far as possible.The taxes recovered for the year ended 2014 amounted to:

Once it is deemed that a potential benefit of a loss carry forward does not meet the more likely than not criteria,the benefit may not be recognized.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 6: Revenue Recognition

CCA is an optional deduction and may be adjusted downwards in order to create taxable income.

The maximum number of years a tax loss can be carried forward is:

If a corporation incurs a taxable loss,they are entitled to carry the loss back for three years or forward for twenty years.

Choose the best statement with respect to tax rates.

Taxes are recovered at the tax rate in effect during the year of the loss.

Choose the best statement with respect to tax rates.

Carry back and carry forward procedures for temporary differences are always applied,even when there are no temporary differences for deductible items,and there are no current income taxes payable.

What factor would most likely cause a firm to choose the carry forward only option for a net operating loss?

If a potential benefit of a loss carry forward that was previously determined to meet the more likely than not criteria has now been determined not to meet the criteria,it should be reversed.

What options are open to a company that did not previously set up a deferred income tax benefit of a tax loss carry forward but has now determined that the probability of realization is greater than 50%?

Once a deferred benefit of a tax loss carry forward has been recorded,does it have to remain on the balance sheet until realized? Explain.

In order to help companies and their auditors determine whether the criteria "more likely than not" has been realized,IAS 12 has set out some guidelines for unfavourable evidence.List two of these.

The following information for LAS Corporation is available: LAS applies its tax losses sequentially,that is,tax losses are carried back as far as possible.The taxes recovered for the year ended 2014 amounted to:

Once it is deemed that a potential benefit of a loss carry forward does not meet the more likely than not criteria,the benefit may not be recognized.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters