Question 1

Amanda Corporation incurred $10,000 of meals and entertainment expenses for the year ended December 31.The amount that is deductible for tax purposes is:

Accepted Answer

A)  $5,000 
B)  $7,500 
C)  $10,000 
D)  $0 
A)  $5,000 
B)  $7,500 
C)  $10,000 
D)  $0

Question 2

EGR Company provided you with the following information:
2013 Net Income: $1,500,000
2014 Net Income: $900,000
2013 Tax rate: 40%
2014 Tax rate: 35%
In addition,the only difference between accounting and tax are warranty costs accrued of $100,000 in 2013.No actual warranty expenses were incurred in 2013 or 2014.Prepare journal entries for 2013 and 2014 to record income tax expense.

Accepted Answer

The answer of EGR Company provided you with the following...

Question 3

EGR Corporation has one asset worth $650,000.Accumulated Depreciation to date is $230,000 and accumulated CCA is $200,000.The Corporation also recorded warranty expense of $35,000.To date no customers have required warranty service,so no warranty expenditures have been made.Assuming the tax rate is constant at 40%,this will result in a:

Accepted Answer

A)  A Deferred income tax asset of $2,000 
B)  A Deferred income tax liability of $2,000 
C)  A Deferred income tax asset of $26,000 
D)  A Deferred income tax liability of $26,000 
A)  A Deferred income tax asset of $2,000 
B)  A Deferred income tax liability of $2,000 
C)  A Deferred income tax asset of $26,000 
D)  A Deferred income tax liability of $26,000

Question 4

Which tax rate should be used to measure a deferred income tax asset or liability?

Accepted Answer

The substantially enacted tax

Question 5

Temporary differences can be dealt with in a number of different ways.The method recommended for public companies is the:

Accepted Answer

A)  Flow-through method 
B)  Comprehensive Allocation Method. 
C)  Partial Allocation Method. 
D)  Taxes Payable Method. 
A)  Flow-through method 
B)  Comprehensive Allocation Method. 
C)  Partial Allocation Method. 
D)  Taxes Payable Method.

Question 6

A firm reported the following in its income statement for the current year: depreciation expense,$4,000; pollution violation fine,$12,000; pre-tax accounting income,$10,000.The tax rate is 40%.For tax purposes,the CCA deduction was $9,000.What amount of CURRENT income tax expense will be recognized for this year?

Accepted Answer

A)  $7,800 
B)  $4,000 
C)  $6,800 
D)  $400 
E)  $8,800 
A)  $7,800 
B)  $4,000 
C)  $6,800 
D)  $400 
E)  $8,800

Question 7

The following information is available for Ryan Corporation: Assets at cost-$260,000 (8 year life,straight-line depreciation,no salvage value,purchased 2 years ago); Accumulated depreciation-$65,000.Accumulated CCA-$105,300; CCA rate-30%; meals and entertainment recorded in the books-$12,000; golf dues paid and expensed on the books-$5,000; pre-tax accounting income-$40,000.No CCA was taken during the current year.Based on this information and a constant tax rate of 45%,which of the following would appear on the statement of financial position as a result of the information given above?

Accepted Answer

A)  An income tax liability of $45,000. 
B)  A deferred tax asset of $3,510. 
C)  A deferred tax liability of $3,510. 
D)  A deferred tax asset of $18,135. 
E)  A deferred tax liability of $18,135. 
A)  An income tax liability of $45,000. 
B)  A deferred tax asset of $3,510. 
C)  A deferred tax liability of $3,510. 
D)  A deferred tax asset of $18,135. 
E)  A deferred tax liability of $18,135.

Question 8

EGR just completed its first year end.During the year,EGR recorded $12,000 in depreciation ($18,500 CCA).In addition there was a deduction in the accounting records for meals and entertainment amounting to $6,000.As a result taxable income will:

Accepted Answer

A)  be higher than accounting income by $5,500. 
B)  be lower than accounting income by $500. 
C)  be higher than accounting income by $500. 
D)  be lower than accounting income by $5,500. 
E)  be equal to accounting income. 
A)  be higher than accounting income by $5,500. 
B)  be lower than accounting income by $500. 
C)  be higher than accounting income by $500. 
D)  be lower than accounting income by $5,500. 
E)  be equal to accounting income.

Question 9

ABC Co.in its first year of business has taxable income of $2,000,book depreciation of $3,000 and CCA of $4,600,and recognized $800 of warranty expense but performed no warranty service.ABC's pre-tax accounting income would be:

Accepted Answer

A)  $1,200 
B)  $2,000 
C)  $2,800 
D)  $3,600 
A)  $1,200 
B)  $2,000 
C)  $2,800 
D)  $3,600

Question 10

Under IFRS,the amount of taxes paid must be disclosed on the face of the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 11

JMR Corporation has income before tax of $500,000.Included in this amount are meals and entertainment amounting to $10,000,warranty costs of $80,000 ($20,000 in warranty claims),depreciation $78,000 and dividends from a taxable Canadian Corporation of $20,000.CCA for the year amounted to $90,000.Calculate taxable income.

Accepted Answer

Taxable income: $500

Question 12

The following information is available for Ryan Corporation: Assets at cost-$260,000; Accumulated depreciation-$80,000; Accumulated CCA-$90,000; meals and entertainment recorded in the books-$12,000; golf dues paid-$5,000.Based on this information and a tax rate of 45%,what is the amount of the temporary difference?

Accepted Answer

A)  $0 
B)  $1,000 
C)  $4,000 
D)  $10,000 
A)  $0 
B)  $1,000 
C)  $4,000 
D)  $10,000

Question 13

Deferred taxes may be classified as either current or non-current under IFRS.

Accepted Answer

A) True 
 B)False

Question 14

JMR Corporation has income before tax of $800,000.Included in this amount are meals and entertainment amounting to $9,000,warranty costs of $100,000 ($65,000 in warranty claims),depreciation $94,000 and dividends from a taxable Canadian Corporation of $15,000.CCA for the year amounted to $90,000 and the tax rate is 40%.Calculate income tax expense.

Accepted Answer

Taxable income: $800,000 + $4,500 + $100

Question 15

If a company incurs $1,500 of expenditures for meals and entertainment,this amount represents a permanent difference.

Accepted Answer

A) True 
 B)False

Question 16

In Canada,tax rates are usually enacted in the year to which they pertain.

Accepted Answer

A) True 
 B)False

Question 17

A temporary difference that is deductible in future years is called:

Accepted Answer

A)  A deferred tax liability 
B)  A deferred tax asset 
C)  A permanent tax asset 
D)  A permanent tax liability 
A)  A deferred tax liability 
B)  A deferred tax asset 
C)  A permanent tax asset 
D)  A permanent tax liability

Question 18

A deductible amount is exemplified by all of the following except:

Accepted Answer

A)  Revenue that is included in the tax return before it is included in pre-tax accounting income. 
B)  Gain that is included in the tax return before it is included in pre-tax accounting income. 
C)  Expense that is included in the tax return after it is included in pre-tax accounting income. 
D)  Loss that is included in the tax return after it is included in pre-tax accounting income. 
E)  Expense that is included in the tax return before it is included in pre-tax accounting income. 
A)  Revenue that is included in the tax return before it is included in pre-tax accounting income. 
B)  Gain that is included in the tax return before it is included in pre-tax accounting income. 
C)  Expense that is included in the tax return after it is included in pre-tax accounting income. 
D)  Loss that is included in the tax return after it is included in pre-tax accounting income. 
E)  Expense that is included in the tax return before it is included in pre-tax accounting income.

Question 19

Explain the income tax disclosures required by the IASB.

Accepted Answer

i)The amount of income tax expense (or b

Question 20

During 2013,MJB has pre-tax accounting income of $8,400.There were no permanent differences.MJB's only temporary difference for 2013 was rent revenue collected in advance of $2,400.None of this amount is recognized for book purposes.MJB's taxable income for 2013 would be:

Accepted Answer

A)  $6,000 
B)  $8,400 
C)  $9,600 
D)  $10,800 
A)  $6,000 
B)  $8,400 
C)  $9,600 
D)  $10,800

Amanda Corporation incurred $10,000 of meals and entertainment expenses for the year ended December 31.The amount that is deductible for tax purposes is:

Which tax rate should be used to measure a deferred income tax asset or liability?

Temporary differences can be dealt with in a number of different ways.The method recommended for public companies is the:

EGR just completed its first year end.During the year,EGR recorded $12,000 in depreciation ($18,500 CCA).In addition there was a deduction in the accounting records for meals and entertainment amounting to $6,000.As a result taxable income will:

ABC Co.in its first year of business has taxable income of $2,000,book depreciation of $3,000 and CCA of $4,600,and recognized $800 of warranty expense but performed no warranty service.ABC's pre-tax accounting income would be:

Under IFRS,the amount of taxes paid must be disclosed on the face of the cash flow statement.

Deferred taxes may be classified as either current or non-current under IFRS.

If a company incurs $1,500 of expenditures for meals and entertainment,this amount represents a permanent difference.

In Canada,tax rates are usually enacted in the year to which they pertain.

A temporary difference that is deductible in future years is called:

A deductible amount is exemplified by all of the following except:

Explain the income tax disclosures required by the IASB.

During 2013,MJB has pre-tax accounting income of $8,400.There were no permanent differences.MJB's only temporary difference for 2013 was rent revenue collected in advance of $2,400.None of this amount is recognized for book purposes.MJB's taxable income for 2013 would be:

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

Revenue Recognition

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

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Exam 5: The Statement of Cash Flows

Amanda Corporation incurred $10,000 of meals and entertainment expenses for the year ended December 31.The amount that is deductible for tax purposes is:

Which tax rate should be used to measure a deferred income tax asset or liability?

Temporary differences can be dealt with in a number of different ways.The method recommended for public companies is the:

EGR just completed its first year end.During the year,EGR recorded $12,000 in depreciation ($18,500 CCA).In addition there was a deduction in the accounting records for meals and entertainment amounting to $6,000.As a result taxable income will:

ABC Co.in its first year of business has taxable income of $2,000,book depreciation of $3,000 and CCA of $4,600,and recognized $800 of warranty expense but performed no warranty service.ABC's pre-tax accounting income would be:

Under IFRS,the amount of taxes paid must be disclosed on the face of the cash flow statement.

Deferred taxes may be classified as either current or non-current under IFRS.

If a company incurs $1,500 of expenditures for meals and entertainment,this amount represents a permanent difference.

In Canada,tax rates are usually enacted in the year to which they pertain.

A temporary difference that is deductible in future years is called:

A deductible amount is exemplified by all of the following except:

Explain the income tax disclosures required by the IASB.

During 2013,MJB has pre-tax accounting income of $8,400.There were no permanent differences.MJB's only temporary difference for 2013 was rent revenue collected in advance of $2,400.None of this amount is recognized for book purposes.MJB's taxable income for 2013 would be:

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

Revenue Recognition

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