Question 1

How much tax expense would be recorded under the accrual method for FY2017?

Accepted Answer

A)  5,000 
B)  40,500 
C)  32,500 
D)  50,500 
A)  5,000 
B)  40,500 
C)  32,500 
D)  50,500

Question 2

Elle,Kay and Jay Inc.has a deferred tax liability of $120,000 at the beginning and $105,000 at the end of the year.During the year,the company had a reversed taxable temporary difference of $100,000,and the tax rate was 35%.
Required:
Determine the balance of temporary differences at the beginning and at the end of the year and the tax rate effective in the previous year.

Accepted Answer

The reversal of the deferred tax liabili

Question 3

A large public company reported that its provision for income taxes was $500 million and that it has a deferred tax liability of 2 billion.A Member of Parliament calls you and says,"I see hundreds of companies who have these huge deferred tax liabilities on their balance sheets.If the government could get even half of what's owed,it could cut the public deficit down to size in a hurry."
Required:
Write a memo to the Member of Parliament explaining the issues.

Accepted Answer

To: Member of Parliament
From:
Re: Provi

Question 4

Which statement is correct?

Accepted Answer

A)  The deferral and accrual methods produce the same tax expense when tax rates are constant. 
B)  The deferral method applies new tax rates to accumulated tax balances. 
C)  The accrual method applies new tax rates to only to current year's income. 
D)  The deferral and accrual methods produce the same tax expense when tax rates are falling. 
A)  The deferral and accrual methods produce the same tax expense when tax rates are constant. 
B)  The deferral method applies new tax rates to accumulated tax balances. 
C)  The accrual method applies new tax rates to only to current year's income. 
D)  The deferral and accrual methods produce the same tax expense when tax rates are falling.

Question 5

Which method reflects the tax effect in the period that tax is payable?

Accepted Answer

A)  Accrual method. 
B)  Taxes payable method. 
C)  Deferral method. 
D)  Tax allocation method. 
A)  Accrual method. 
B)  Taxes payable method. 
C)  Deferral method. 
D)  Tax allocation method.

Question 6

Which statement is accurate?

Accepted Answer

A)  Accounting income is generally higher than taxable income. 
B)  Accounting income is determined by financial reporting. 
C)  The balance sheet is unaffected by the tax accounting method. 
D)  The taxes payable method is a "tax allocation" approach. 
A)  Accounting income is generally higher than taxable income. 
B)  Accounting income is determined by financial reporting. 
C)  The balance sheet is unaffected by the tax accounting method. 
D)  The taxes payable method is a "tax allocation" approach.

Question 7

Under the accrual method,what is the current year temporary difference in FY2017?

Accepted Answer

A)  30,000 
B)  47,250 
C)  35,000 
D)  12,250 
A)  30,000 
B)  47,250 
C)  35,000 
D)  12,250

Question 8

Withering Inc.began operations in 2015.Due to the untimely death of its founder,Edwin Delaney,the company was wound up in 2017.The following table provides information on Withering's income over the three years.
   The statutory income tax rate remained at 45% throughout the three years.
Required:
a.For each year and for the three years combined,compute the following:
- income tax expense under the taxes payable method;
- the effective tax rate (= tax expense / pre-tax income)under the taxes payable method;
- income tax expense under the accrual method;
- effective tax rate under the accrual method.
b.Briefly comment on any differences between the effective tax rates and the statutory rate of 45%.

Accepted Answer

a.Computations:
 @#IMG-DLM&_TB1321_00_TB1321_00_TB

Question 9

What is a deferred tax asset?

Accepted Answer

A)  A deductible temporary difference that results in future taxable income being less than accounting income. 
B)  The amount of income tax recoverable in future periods as a result of deductible temporary differences, losses carried forward, or tax credits carried forward. 
C)  A deductible temporary difference that results in future taxable income being higher than accounting income. 
D)  The amount of income tax payable in future periods as a result of taxable temporary differences. 
A)  A deductible temporary difference that results in future taxable income being less than accounting income. 
B)  The amount of income tax recoverable in future periods as a result of deductible temporary differences, losses carried forward, or tax credits carried forward. 
C)  A deductible temporary difference that results in future taxable income being higher than accounting income. 
D)  The amount of income tax payable in future periods as a result of taxable temporary differences.

Question 10

A company earns $490,000 in pre-tax income,while its tax return shows taxable income of $380,000.At a tax rate of 35%,how much is the income tax expense under the taxes payable method permitted under ASPE?

Accepted Answer

@#IMG-DLM&_TB1321_00

Question 11

What is the income tax payable under the deferral method for FY2016?

Accepted Answer

A)  $25,500 
B)  $30,000 
C)  $30,750 
D)  $36,000 
A)  $25,500 
B)  $30,000 
C)  $30,750 
D)  $36,000

Question 12

How much tax would be reported under the taxes payable method for F2018?

Accepted Answer

A)  25,500 
B)  31,500 
C)  33,750 
D)  36,000 
A)  25,500 
B)  31,500 
C)  33,750 
D)  36,000

Question 13

For the year ended October 31,2018,NB Financial Group (National Bank)reported income before tax of $2,160 million and income tax expense of $274 million,for an effective tax rate of 12.7% ($274m / $2,160m).In the notes to the financial statements,NB's disclosures included the following information:
   Required:
a.From NB's disclosures provided above,identify any permanent differences.
b.In which direction did the tax rate change from 2017 to 2018?
c.Refer to the line "Recovery of prior years' income taxes" in the above disclosures.What does this information imply about NB's treatment of tax losses in prior years?

Accepted Answer

a.Permanent differences:
 @#IMG-DLM&_TB1321_00_TB1

Question 14

A company had taxable income of $2 million in fiscal 2016 and paid taxes of 0.4 million; the company incurred a loss of $0.5 million in fiscal 2018 when the tax rate is 30%.How much refund is the company entitled to?

Accepted Answer

A)  $0.2 million 
B)  $0.1 million 
C)  $0.4 million 
D)  $0.6 million 
A)  $0.2 million 
B)  $0.1 million 
C)  $0.4 million 
D)  $0.6 million

Question 15

Which statement is true?

Accepted Answer

A)  A company should carry forward losses when they have had prior years' taxable income. 
B)  A company might carry their tax losses forward if they have exhausted the ability to carry losses backward. 
C)  Carrying forward tax losses results in immediate cash flow to the company. 
D)  Canadian tax laws allow corporations to carry an operating loss backward for 3 years and forward indefinitely, and capital losses backward for 3 years and forward indefinitely. 
A)  A company should carry forward losses when they have had prior years' taxable income. 
B)  A company might carry their tax losses forward if they have exhausted the ability to carry losses backward. 
C)  Carrying forward tax losses results in immediate cash flow to the company. 
D)  Canadian tax laws allow corporations to carry an operating loss backward for 3 years and forward indefinitely, and capital losses backward for 3 years and forward indefinitely.

Question 16

What is one reason to use the taxes payable method?

Accepted Answer

A)  It is a complicated method, but results in the least tax expense. 
B)  A company only pays tax once a year under this method. 
C)  It results in the best matching for the balance sheet. 
D)  It is the least costly method for tax accounting. 
A)  It is a complicated method, but results in the least tax expense. 
B)  A company only pays tax once a year under this method. 
C)  It results in the best matching for the balance sheet. 
D)  It is the least costly method for tax accounting.

Question 17

Under the accrual method,what is the current year temporary difference in FY2016?

Accepted Answer

A)  4,500 
B)  30,500 
C)  5,000 
D)  39,500 
A)  4,500 
B)  30,500 
C)  5,000 
D)  39,500

Question 18

When will there be a recapture of depreciation?

Accepted Answer

A)  When proceeds of disposal are less than undepreciated capital cost. 
B)  When proceeds of disposal are between undepreciated capital cost and original cost. 
C)  When proceeds of disposal are more than undepreciated capital cost. 
D)  When proceeds of disposal are less than original cost. 
A)  When proceeds of disposal are less than undepreciated capital cost. 
B)  When proceeds of disposal are between undepreciated capital cost and original cost. 
C)  When proceeds of disposal are more than undepreciated capital cost. 
D)  When proceeds of disposal are less than original cost.

How much tax expense would be recorded under the accrual method for FY2017?

Which statement is correct?

Which method reflects the tax effect in the period that tax is payable?

Which statement is accurate?

Under the accrual method,what is the current year temporary difference in FY2017?

What is a deferred tax asset?

A company earns $490,000 in pre-tax income,while its tax return shows taxable income of $380,000.At a tax rate of 35%,how much is the income tax expense under the taxes payable method permitted under ASPE?

What is the income tax payable under the deferral method for FY2016?

How much tax would be reported under the taxes payable method for F2018?

A company had taxable income of $2 million in fiscal 2016 and paid taxes of 0.4 million; the company incurred a loss of $0.5 million in fiscal 2018 when the tax rate is 30%.How much refund is the company entitled to?

Which statement is true?

What is one reason to use the taxes payable method?

Under the accrual method,what is the current year temporary difference in FY2016?

When will there be a recapture of depreciation?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Accounting Changes

Filters

Exam 6: Accounting for Income Taxes

How much tax expense would be recorded under the accrual method for FY2017?

Which statement is correct?

Which method reflects the tax effect in the period that tax is payable?

Which statement is accurate?

Under the accrual method,what is the current year temporary difference in FY2017?

What is a deferred tax asset?

A company earns $490,000 in pre-tax income,while its tax return shows taxable income of $380,000.At a tax rate of 35%,how much is the income tax expense under the taxes payable method permitted under ASPE?

What is the income tax payable under the deferral method for FY2016?

How much tax would be reported under the taxes payable method for F2018?

A company had taxable income of $2 million in fiscal 2016 and paid taxes of 0.4 million; the company incurred a loss of $0.5 million in fiscal 2018 when the tax rate is 30%.How much refund is the company entitled to?

Which statement is true?

What is one reason to use the taxes payable method?

Under the accrual method,what is the current year temporary difference in FY2016?

When will there be a recapture of depreciation?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Accounting Changes

Filters