Question 1

All individual temporary differences are expected to fully reverse over time.

Accepted Answer

A) True 
 B)False

Question 2

Golf dues paid for by a company are:

Accepted Answer

A)  a temporary difference 
B)  a timing difference 
C)  a permanent difference 
D)  a reversing difference 
A)  a temporary difference 
B)  a timing difference 
C)  a permanent difference 
D)  a reversing difference

Question 3

List five permanent differences.

Accepted Answer

1.dividends received by Canadian corpora

Question 4

The following information is available to you: Income before tax $1,230,000,depreciation,$350,000; CCA,$300,000; tax rate,40%.Prepare the journal entry to record taxes for the year.(Assume there are no previous tax differences.)

Accepted Answer

Taxable income = 1,230,000 + 3

Question 5

OCI elements are shown on the statement of comprehensive income on a pre-tax basis.

Accepted Answer

A) True 
 B)False

Question 6

ABC Inc.purchased new machinery for $2 million on January 1st,2014.For accounting purposes,the company depreciates all machinery on a straight-line basis (no salvage value)over a five year period.For tax purposes,CCA on all machinery is taken at a rate of 20%,with half a year's CCA taken in the year of acquisition.The tax rate for 2014 is 40%.The tax rate for years 2015 and later is 35%.Assume that all rates are enacted in the year to which they pertain.Using the shortcut approach,determine the deferred income tax asset or liability at the end of 2014.How (if at all)would your answer change if the tax rate for all years 2014 and beyond were enacted in 2014?

Accepted Answer

In this case,the tax rates for years 201

Question 7

All temporary differences are related to differences in the timing of accounting recognition compared with income tax recognition.

Accepted Answer

A) True 
 B)False

Question 8

All of the following are all justifications for the use of the comprehensive allocation method except for:

Accepted Answer

A)  Proponents say that a future cash flow impact arises from all temporary differences. 
B)  The matching principle is best served by using the comprehensive allocation method. 
C)  Income tax is an aggregate measure, applied to the overall operations of the company. 
D)  Proponents say that this provides a more accurate figure than does the comprehensive allocation method. 
A)  Proponents say that a future cash flow impact arises from all temporary differences. 
B)  The matching principle is best served by using the comprehensive allocation method. 
C)  Income tax is an aggregate measure, applied to the overall operations of the company. 
D)  Proponents say that this provides a more accurate figure than does the comprehensive allocation method.

Question 9

Amanda Company sold an asset and as a result had a capital gain of $15,000.Fifty percent of this amount represents a permanent difference.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is an example of a temporary difference,which would result in a deferred tax asset?

Accepted Answer

A)  Use of straight-line depreciation for accounting purposes and an accelerated rate for income tax purposes 
B)  Rent revenue collected in advance when included in taxable income before it is included in pre-tax accounting income 
C)  Use of a shorter depreciation period for accounting purposes than is used for income tax purposes 
D)  Investment losses recognized later for accounting purposes than for tax purposes 
A)  Use of straight-line depreciation for accounting purposes and an accelerated rate for income tax purposes 
B)  Rent revenue collected in advance when included in taxable income before it is included in pre-tax accounting income 
C)  Use of a shorter depreciation period for accounting purposes than is used for income tax purposes 
D)  Investment losses recognized later for accounting purposes than for tax purposes

Question 11

KER commenced operations in 2013.The company has recorded an accrual for warranty in its books during the year ended December 31,2014 amounting to $100,000.During the year 2014,customers required service from goods sold in 2013 amounting to $60,000.No similar expenditures were made during 2013.KER accrued warranty expenses totalling $100,000 for 2013 and 2014.As a result of the information above,what is the amount of deferred taxes that will appear on the 2014 statement of financial position? Assume a 20% tax rate for both years.

Accepted Answer

A)  Nil. 
B)  A Deferred tax asset of $8,000 
C)  A Deferred tax liability of $8,000 
D)  A Deferred tax asset of $40,000 
A)  Nil. 
B)  A Deferred tax asset of $8,000 
C)  A Deferred tax liability of $8,000 
D)  A Deferred tax asset of $40,000

Question 12

KG Company had capital assets with a carrying value of $1,670,000 and a tax value of $1,560,000.In addition they had an accrued warranty liability of $80,000 of which $20,000 had actually been incurred and golf club dues in the amount of $3,000.Calculate the temporary difference deductible (taxable).

Accepted Answer

Temporary taxable di

Question 13

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 the current year,and no changes to this rate are foreseen in the near term.For tax purposes,the CCA deduction was $9,000.What amount of deferred income tax (benefit)expense will be recognized for this year? Assume a beginning Deferred Tax asset balance of $4,000.

Accepted Answer

A)  A $2,000 deferred tax benefit. 
B)  A $2,000 deferred tax expense. 
C)  A $6,000 deferred tax benefit. 
D)  A $6,000 deferred tax expense. 
A)  A $2,000 deferred tax benefit. 
B)  A $2,000 deferred tax expense. 
C)  A $6,000 deferred tax benefit. 
D)  A $6,000 deferred tax expense.

Question 14

Deferred taxes must be discounted under IFRS.

Accepted Answer

A) True 
 B)False

Question 15

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 deferred income tax (benefit)expense will be recognized for this year? Assume no beginning deferred tax amounts and a constant tax rate of 40%.

Accepted Answer

A)  A $2,000 deferred tax benefit. 
B)  A $2,000 deferred tax expense. 
C)  A $6,800 deferred tax benefit. 
D)  A $6,800 deferred tax expense. 
A)  A $2,000 deferred tax benefit. 
B)  A $2,000 deferred tax expense. 
C)  A $6,800 deferred tax benefit. 
D)  A $6,800 deferred tax expense.

Question 16

Deferred taxes appear on a company's balance sheet as a result of inter-period tax allocation.

Accepted Answer

A) True 
 B)False

All individual temporary differences are expected to fully reverse over time.

Golf dues paid for by a company are:

List five permanent differences.

The following information is available to you: Income before tax $1,230,000,depreciation,$350,000; CCA,$300,000; tax rate,40%.Prepare the journal entry to record taxes for the year.(Assume there are no previous tax differences.)

OCI elements are shown on the statement of comprehensive income on a pre-tax basis.

All temporary differences are related to differences in the timing of accounting recognition compared with income tax recognition.

All of the following are all justifications for the use of the comprehensive allocation method except for:

Amanda Company sold an asset and as a result had a capital gain of $15,000.Fifty percent of this amount represents a permanent difference.

Which of the following is an example of a temporary difference,which would result in a deferred tax asset?

Deferred taxes must be discounted under IFRS.

Deferred taxes appear on a company's balance sheet as a result of inter-period tax allocation.

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

Exam 5: The Statement of Cash Flows

All individual temporary differences are expected to fully reverse over time.

Golf dues paid for by a company are:

List five permanent differences.

The following information is available to you: Income before tax $1,230,000,depreciation,$350,000; CCA,$300,000; tax rate,40%.Prepare the journal entry to record taxes for the year.(Assume there are no previous tax differences.)

OCI elements are shown on the statement of comprehensive income on a pre-tax basis.

All temporary differences are related to differences in the timing of accounting recognition compared with income tax recognition.

All of the following are all justifications for the use of the comprehensive allocation method except for:

Amanda Company sold an asset and as a result had a capital gain of $15,000.Fifty percent of this amount represents a permanent difference.

Which of the following is an example of a temporary difference,which would result in a deferred tax asset?

Deferred taxes must be discounted under IFRS.

Deferred taxes appear on a company's balance sheet as a result of inter-period tax allocation.

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