Question 1

Explain how a tax loss may arise and how tax losses are treated under Australian tax legislation.

Accepted Answer

A tax loss will arise when there is an excess of allowable deductions over assessable income.Tax losses may be carried forward indefinitely and claimed against taxable income in future years.

Question 2

A taxable temporary difference is expected to lead to the payment of:

Accepted Answer

A) more tax in the future and gives rise to a deferred tax asset 
B) less tax in the future and gives rise to a deferred tax asset 
C) more tax in the future and gives rise to a deferred tax liability 
D) less tax in the future and gives rise to a deferred tax liability. 
A) more tax in the future and gives rise to a deferred tax asset 
B) less tax in the future and gives rise to a deferred tax asset 
C) more tax in the future and gives rise to a deferred tax liability 
D) less tax in the future and gives rise to a deferred tax liability. C

Question 3

A deductible temporary difference is expected to lead to the payment of:

Accepted Answer

A) more tax in the future and gives rise to a deferred tax asset 
B) less tax in the future and gives rise to a deferred tax asset 
C) more tax in the future and gives rise to a deferred tax liability 
D) less tax in the future and gives rise to a deferred tax liability. 
A) more tax in the future and gives rise to a deferred tax asset 
B) less tax in the future and gives rise to a deferred tax asset 
C) more tax in the future and gives rise to a deferred tax liability 
D) less tax in the future and gives rise to a deferred tax liability. B

Question 4

Explain how deferred tax assets and liabilities are measured.

Accepted Answer

Deferred tax assets and liabilities are

Question 5

The deferred tax asset is:

Accepted Answer

A) $1 500 
B) $4 500 
C) $5 000 
D) $25 500. 
A) $1 500 
B) $4 500 
C) $5 000 
D) $25 500.

Question 6

Balchin Limited had the following deferred tax balances at reporting date:
-Deferred tax assets $12 000
-Deferred tax liabilities $30 000
Effective from the first day of the next financial period,the company rate of income tax was reduced from 40% to 30%.The adjustment to income tax expense to recognise the impact of the tax rate change is:

Accepted Answer

A) DR $6 000 
B) DR $4 500 
C) CR $6 000 
D) CR $4 500. 
A) DR $6 000 
B) DR $4 500 
C) CR $6 000 
D) CR $4 500.

Question 7

The following information was extracted from the financial records of Pamakari Limited: Equipment purchased on 1 July 20X2 for $100 000 (accounting depreciation 10% straight line tax depreciation 20% straight line).If the company tax rate is 30%,the deferred tax item that will be recorded by Pamakari Limited at 30 June 20X3 is:

Accepted Answer

A) debit Deferred tax asset $10 000 
B) credit Deferred tax asset $3 000 
C) debit Deferred tax liability $10 000 
D) credit Deferred tax liability $3 000. 
A) debit Deferred tax asset $10 000 
B) credit Deferred tax asset $3 000 
C) debit Deferred tax liability $10 000 
D) credit Deferred tax liability $3 000.

Question 8

CTT Limited has an asset which cost $300 and against which depreciation of $100 has accumulated.The accumulated depreciation for tax purposes is $180 and the company tax rate is 30%.The tax base of this asset is:

Accepted Answer

A) $120 
B) $220 
C) $80 
D) $20 
A) $120 
B) $220 
C) $80 
D) $20

Question 9

The deferred tax liability is:

Accepted Answer

A) $1 500 
B) $4 500 
C) $15 000 
D) $34 500. 
A) $1 500 
B) $4 500 
C) $15 000 
D) $34 500.

Question 10

Generally,when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on:

Accepted Answer

A) cash flows 
B) cash flows adjusted for depreciation charges 
C) accrual accounting and is subject to the requirements of accounting standards 
D) the income tax legislation. 
A) cash flows 
B) cash flows adjusted for depreciation charges 
C) accrual accounting and is subject to the requirements of accounting standards 
D) the income tax legislation.

Question 11

What is a 'tax base' and how is it calculated?

Accepted Answer

The tax base of an asset is the amount t

Question 12

Under AASB 112 Incomes Taxes,deferred tax assets and liabilities are measured at the tax rates that:

Accepted Answer

A) applied at the beginning of the reporting period 
B) at the end of the reporting period 
C) at the rates that prevail at the reporting date 
D) are expected to apply when the asset or liability is settled. 
A) applied at the beginning of the reporting period 
B) at the end of the reporting period 
C) at the rates that prevail at the reporting date 
D) are expected to apply when the asset or liability is settled.

Question 13

Unless a company has a legal right of set-off,AASB 112 Income Taxes,requires disclosure of all of the following information for deferred tax statement of financial position items:
I The amount of deferred tax assets recognised.
II The amount of the deferred tax liabilities recognised.
III The net amount of the deferred tax assets and liabilities recognised.
IV The amount of the deferred tax asset relating to tax losses.

Accepted Answer

A) I,II and IV only 
B) I,II and III only 
C) III and IV only 
D) IV only. 
A) I,II and IV only 
B) I,II and III only 
C) III and IV only 
D) IV only.

Question 14

Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting,and the tax bases of those net assets determined under the Income Tax Assessment Act,are described as:

Accepted Answer

A) temporary differences 
B) permanent differences 
C) tax losses 
D) the current income tax liability. 
A) temporary differences 
B) permanent differences 
C) tax losses 
D) the current income tax liability.

Question 15

D'Silva Limited has a product warranty liability amounting to $10 000.The product warranty costs are not tax deductible until paid out to customers.The company tax rate is 30%.The company has:

Accepted Answer

A) a deductible temporary difference of $10 000 
B) an taxable temporary difference of $10 000 
C) a tax base of $10 000 
D) a future deductible amount of $0. 
A) a deductible temporary difference of $10 000 
B) an taxable temporary difference of $10 000 
C) a tax base of $10 000 
D) a future deductible amount of $0.

Question 16

In jurisdictions where the impairment of goodwill is not tax deductible,AASB 112 Income Taxes:

Accepted Answer

A) does not permit the application of deferred tax accounting to goodwill 
B) allows the recognition of a deferred tax item in relation to goodwill 
C) requires that any deferred tax items in relation to goodwill be recognised directly in equity 
D) requires that any deferred tax items for goodwill be capitalised in the carrying amount of goodwill. 
A) does not permit the application of deferred tax accounting to goodwill 
B) allows the recognition of a deferred tax item in relation to goodwill 
C) requires that any deferred tax items in relation to goodwill be recognised directly in equity 
D) requires that any deferred tax items for goodwill be capitalised in the carrying amount of goodwill.

Question 17

Explain why taxable temporary differences relating to goodwill are excluded under AASB 112.

Accepted Answer

Although goodwill creates a taxable temp

Question 18

Tax losses can be viewed as providing:

Accepted Answer

A) taxable temporary differences,and therefore a current tax liability 
B) taxable temporary differences,and therefore a current tax refund 
C) deductible temporary differences,and therefore a deferred tax asset 
D) deductible temporary differences,and therefore deferred tax liabilities. 
A) taxable temporary differences,and therefore a current tax liability 
B) taxable temporary differences,and therefore a current tax refund 
C) deductible temporary differences,and therefore a deferred tax asset 
D) deductible temporary differences,and therefore deferred tax liabilities.

Question 19

Explain the difference between accounting profit and taxable profit.

Accepted Answer

Accounting profit is the net profit or l

Question 20

The tax expense related to profit or loss of the period is required to be presented:

Accepted Answer

A) on the face of the statement of financial position 
B) on the face of the statement of profit or loss and other comprehensive income 
C) in the statement of cash flows 
D) in the statement of changes in equity. 
A) on the face of the statement of financial position 
B) on the face of the statement of profit or loss and other comprehensive income 
C) in the statement of cash flows 
D) in the statement of changes in equity.

Explain how a tax loss may arise and how tax losses are treated under Australian tax legislation.

A taxable temporary difference is expected to lead to the payment of:

A deductible temporary difference is expected to lead to the payment of:

Explain how deferred tax assets and liabilities are measured.

The deferred tax asset is:

CTT Limited has an asset which cost $300 and against which depreciation of $100 has accumulated.The accumulated depreciation for tax purposes is $180 and the company tax rate is 30%.The tax base of this asset is:

The deferred tax liability is:

Generally,when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on:

What is a 'tax base' and how is it calculated?

Under AASB 112 Incomes Taxes,deferred tax assets and liabilities are measured at the tax rates that:

Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting,and the tax bases of those net assets determined under the Income Tax Assessment Act,are described as:

D'Silva Limited has a product warranty liability amounting to $10 000.The product warranty costs are not tax deductible until paid out to customers.The company tax rate is 30%.The company has:

In jurisdictions where the impairment of goodwill is not tax deductible,AASB 112 Income Taxes:

Explain why taxable temporary differences relating to goodwill are excluded under AASB 112.

Tax losses can be viewed as providing:

Explain the difference between accounting profit and taxable profit.

The tax expense related to profit or loss of the period is required to be presented:

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Accounting for Investments in Associates

Insolvency and Liquidation

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Exam 6: Accounting for Company Income Tax

Explain how a tax loss may arise and how tax losses are treated under Australian tax legislation.

A taxable temporary difference is expected to lead to the payment of:

A deductible temporary difference is expected to lead to the payment of:

Explain how deferred tax assets and liabilities are measured.

The deferred tax asset is:

CTT Limited has an asset which cost $300 and against which depreciation of $100 has accumulated.The accumulated depreciation for tax purposes is $180 and the company tax rate is 30%.The tax base of this asset is:

The deferred tax liability is:

Generally,when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on:

What is a 'tax base' and how is it calculated?

Under AASB 112 Incomes Taxes,deferred tax assets and liabilities are measured at the tax rates that:

Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting,and the tax bases of those net assets determined under the Income Tax Assessment Act,are described as:

D'Silva Limited has a product warranty liability amounting to $10 000.The product warranty costs are not tax deductible until paid out to customers.The company tax rate is 30%.The company has:

In jurisdictions where the impairment of goodwill is not tax deductible,AASB 112 Income Taxes:

Explain why taxable temporary differences relating to goodwill are excluded under AASB 112.

Tax losses can be viewed as providing:

Explain the difference between accounting profit and taxable profit.

The tax expense related to profit or loss of the period is required to be presented:

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Accounting for Investments in Associates

Insolvency and Liquidation

Filters