Question 1

If all temporary differences entering into the determination of pretax accounting income are considered in the computation of deferred taxes and income tax expense,then the

Accepted Answer

A)  no-deferral approach is being applied. 
B)  comprehensive recognition approach is being applied. 
C)  partial recognition approach is being applied. 
D)  net-of-tax method is being applied. 
A)  no-deferral approach is being applied. 
B)  comprehensive recognition approach is being applied. 
C)  partial recognition approach is being applied. 
D)  net-of-tax method is being applied.

Question 2

International accounting standards currently are moving toward the

Accepted Answer

A)  comprehensive recognition approach. 
B)  partial recognition approach. 
C)  no-deferral approach. 
D)  discounted comprehensive recognition approach. 
A)  comprehensive recognition approach. 
B)  partial recognition approach. 
C)  no-deferral approach. 
D)  discounted comprehensive recognition approach.

Question 3

Tongass had pretax accounting income of $1,400 during 2014.Tongass used accelerated depreciation for tax purposes ($1,000)and straight-line depreciation for financial reporting purposes ($200).During 2014,Tongass accrued warranty expenses of $900 and paid cash to honor warranties of $500.Tongass's taxable income for 2014 would be

Accepted Answer

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

Question 4

For the current year,Phoenix Company reported income tax expense of $195,000.Income taxes payable at the end of the prior year were $125,000 and at the end of the current year were $130,000.The deferred tax liability classified as noncurrent that resulted from the use of MACRS for tax purposes and straight-line depreciation for financial reporting purposes increased from $120,000 at the beginning of the current year to $123,000 at the end of the current year.How much cash was paid for income taxes during the year?

Accepted Answer

A)  $187,000 
B)  $197,000 
C)  $195,000 
D)  $190,000 
A)  $187,000 
B)  $197,000 
C)  $195,000 
D)  $190,000

Question 5

Longhorn Corporation reported a loss for both financial reporting purposes and tax reporting purposes of $231,000 in 2014.For financial reporting purposes,Longhorn reported income before taxes for years 2011-2013 as listed below:   Assuming Longhorn's tax rate is 30 percent in all periods,and that the company uses the carryback provisions,what amount should appear in Longhorn's statements for financial reporting purposes as a net loss in 2014?

Accepted Answer

A)  $0 
B)  $69,300 
C)  $161,700 
D)  $234,300 
A)  $0 
B)  $69,300 
C)  $161,700 
D)  $234,300

Question 6

Oriole Industries computed a pretax financial income of $118,500 for the first year of its operations ended December 31,2014.Oriole uses an accelerated cost recovery method on its tax return,and straight-line depreciation on its books.
The difference between the tax and book deduction for depreciation over the five-year life of the assets acquired in 2014 are as follows:
   The enacted tax rates for this year and the next four years are as follows:
   Use the provisions of FASB Statement No.109 and assume that it is more likely than not that income will be sufficient in all future years to realize any deductible amounts.

Accepted Answer

(1)
 @#IMG-DLM& Under the provisions of

Question 7

Amengual Corporation began operations in 2011 and had operating losses of $400,000 in 2012 and $300,000 in 2013.For the year ended December 31,2014,Amengual had a pretax financial income of $600,000.For 2012 and 2013,assume an enacted tax rate of 30 percent,and for 2014 a 35 percent tax rate.There were no temporary differences in any of the years.In Amengual's 2014 income statement,how much should be reported as income tax expense?

Accepted Answer

A)  $0 
B)  $30,000 
C)  $180,000 
D)  $210,000 
A)  $0 
B)  $30,000 
C)  $180,000 
D)  $210,000

Question 8

In 2014,The Xavier Company,reported pretax financial income of $400,000.Included in that pretax financial income was $90,000 of nontaxable life insurance proceeds received as a result of the death of an officer;$120,000 of warranty expenses accrued but unpaid as of December 31,2014;and $30,000 of life insurance premiums for a policy for an officer.Assuming that no income taxes were previously paid during the year and assuming an income tax rate of 40 percent,the amount of income taxes payable on December 31,2014,would be

Accepted Answer

A)  $120,000. 
B)  $150,000. 
C)  $182,000. 
D)  $184,000. 
A)  $120,000. 
B)  $150,000. 
C)  $182,000. 
D)  $184,000.

Question 9

Garden Company had pretax accounting income of $24,000 during 2014.Garden's only temporary difference for 2011 relates to a sale made in 2012 and recognized for accounting purposes at that time.However,Garden uses the installment sales method of revenue recognition for tax purposes.During 2014 Garden collected a receivable from the 2012 sale which resulted in $6,000 of income under the installment sales method.Garden's taxable income for 2014 would be

Accepted Answer

A)  $6,000. 
B)  $18,000. 
C)  $24,000. 
D)  $30,000. 
A)  $6,000. 
B)  $18,000. 
C)  $24,000. 
D)  $30,000.

Question 10

In 2014,Ryan Corporation reported $85,000 net income before income taxes.The income tax rate for 2014 was 30 percent.Ryan had an unused $65,000 net operating loss carryforward arising in 2013 when the tax rate was 35 percent.The income tax expense Ryan would report for 2014 would be

Accepted Answer

A)  $7,000. 
B)  $6,000. 
C)  $24,600. 
D)  $32,000. 
A)  $7,000. 
B)  $6,000. 
C)  $24,600. 
D)  $32,000.

Question 11

During 2014,Epsilon Company had pretax accounting income of $620.Epsilon's only temporary difference for 2014 was the collection of a receivable that resulted in $220 of income under the installment sales method of revenue recognition that Epsilon uses for tax purposes.The sale was originally made in 2012 and recognized for accounting purposes at that time.Epsilon's taxable income for 2014 would be

Accepted Answer

A)  $400. 
B)  $640. 
C)  $660. 
D)  $840. 
A)  $400. 
B)  $640. 
C)  $660. 
D)  $840.

Question 12

Allsgood Appliances computed a pretax financial loss of $60,000 for the first year of its operations ended December 31,2014.Analysis of the tax and book basis of its liabilities disclosed $80,000 in accrued warranty expenses on the books that had not been deductible from taxable income in 2014,but would be deductible in future years when the warranty expenses were paid.
The future warranty payments are expected to occur in the following pattern:
   The enacted tax rates for this year and the next four years are as follows:
   Use the provisions of FASB Statement No.109.

Accepted Answer

The answer of Allsgood Appliances computed a pretax financial loss...

Question 13

Which of the following items results in a temporary difference deductible amount for a given year?

Accepted Answer

A)  Premiums on officer's life insurance (company is beneficiary) 
B)  Premiums on officer's life insurance (officer is beneficiary) 
C)  Vacation pay accrual 
D)  Accelerated depreciation for tax purposes;straight-line for financial reporting purposes 
A)  Premiums on officer's life insurance (company is beneficiary) 
B)  Premiums on officer's life insurance (officer is beneficiary) 
C)  Vacation pay accrual 
D)  Accelerated depreciation for tax purposes;straight-line for financial reporting purposes

Question 14

The Morris Corporation reported a $59,000 operating loss in 2014.In the preceding three years,Morris reported the following income before taxes and paid the indicated income taxes:   The amount of tax benefit to be reported in 2014 arising from the tax carryback provisions of the current tax code would be

Accepted Answer

A)  $20,650 
B)  $22,500. 
C)  $21,300. 
D)  $20,100 
A)  $20,650 
B)  $22,500. 
C)  $21,300. 
D)  $20,100

Question 15

Analysis of the assets and liabilities of Baxter Corp.on December 31,2014,disclosed assets with a tax basis of $1,000,000 and a book basis of $1,300,000.There was no difference in the liability basis.The difference in asset basis arose from temporary differences that would reverse in the following years:   The enacted tax rates are 30 percent for the years 2014-2017 and 35 percent for 2018-2019.The total deferred tax liability on December 31,2014,should be

Accepted Answer

A)  $105,000. 
B)  $93,900. 
C)  $90,000. 
D)  $69,000. 
A)  $105,000. 
B)  $93,900. 
C)  $90,000. 
D)  $69,000.

Question 16

For the current year,Southern Cross Company reported income tax expense of $45,000.Income taxes payable at the end of the prior year were $20,000 and at the end of the current year were $27,000.The deferred tax liability classified as noncurrent that resulted from the use of MACRS for tax purposes and straight-line depreciation for financial reporting purposes increased from $18,000 at the beginning of the current year to $23,000 at the end of the current year.How much cash was paid for income taxes during the year?

Accepted Answer

A)  $33,000 
B)  $45,000 
C)  $38,000 
D)  $47,000 
A)  $33,000 
B)  $45,000 
C)  $38,000 
D)  $47,000

Question 17

The following information is taken from Glenville Corporation's 2014 financial records:   Assume the taxable temporary difference was created entirely in 2014 and will reverse in equal net taxable amounts in each of the next three years.If tax rates are 40 percent in 2014,35 percent in 2015,35 percent in 2016,and 30 percent in 2017,then the total deferred tax liability Glenville should report on its December 31,2014,balance sheet is

Accepted Answer

A)  $13,500. 
B)  $15,000. 
C)  $15,750. 
D)  $18,000. 
A)  $13,500. 
B)  $15,000. 
C)  $15,750. 
D)  $18,000.

Question 18

Which of the following is the most likely item to result in a deferred tax asset?

Accepted Answer

A)  Using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes 
B)  Using the completed-contract method of recognizing construction revenue tax purposes,but using percentage-of-completion method for financial reporting purposes 
C)  Prepaid expenses 
D)  Unearned revenues 
A)  Using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes 
B)  Using the completed-contract method of recognizing construction revenue tax purposes,but using percentage-of-completion method for financial reporting purposes 
C)  Prepaid expenses 
D)  Unearned revenues

Question 19

Which of the following is an example of a temporary difference that would result in a deferred tax liability?

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 pretax accounting income 
C)  Use of a shorter depreciation period for accounting purposes than is used for income tax purposes 
D)  Investment losses recognized earlier 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 pretax accounting income 
C)  Use of a shorter depreciation period for accounting purposes than is used for income tax purposes 
D)  Investment losses recognized earlier for accounting purposes than for tax purposes

Question 20

Which of the following statements is NOT correct?

Accepted Answer

A)  All current deferred tax liabilities and assets shall be offset and presented as a single amount on the balance sheet. 
B)  Deferred tax assets related to carryforwards shall be classified as current or noncurrent on the balance sheet based on their expected date of reversal. 
C)  All current and noncurrent deferred tax assets shall be offset and presented as a single amount on the balance sheet. 
D)  Deferred tax liabilities and assets shall be classified as current or noncurrent on the balance sheet based on the classification of the asset or liability giving rise to the deferred tax item. 
A)  All current deferred tax liabilities and assets shall be offset and presented as a single amount on the balance sheet. 
B)  Deferred tax assets related to carryforwards shall be classified as current or noncurrent on the balance sheet based on their expected date of reversal. 
C)  All current and noncurrent deferred tax assets shall be offset and presented as a single amount on the balance sheet. 
D)  Deferred tax liabilities and assets shall be classified as current or noncurrent on the balance sheet based on the classification of the asset or liability giving rise to the deferred tax item.

If all temporary differences entering into the determination of pretax accounting income are considered in the computation of deferred taxes and income tax expense,then the

International accounting standards currently are moving toward the

In 2014,Ryan Corporation reported $85,000 net income before income taxes.The income tax rate for 2014 was 30 percent.Ryan had an unused $65,000 net operating loss carryforward arising in 2013 when the tax rate was 35 percent.The income tax expense Ryan would report for 2014 would be

Which of the following items results in a temporary difference deductible amount for a given year?

Which of the following is the most likely item to result in a deferred tax asset?

Which of the following is an example of a temporary difference that would result in a deferred tax liability?

Which of the following statements is NOT correct?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 16: Income Taxes

If all temporary differences entering into the determination of pretax accounting income are considered in the computation of deferred taxes and income tax expense,then the

International accounting standards currently are moving toward the

In 2014,Ryan Corporation reported $85,000 net income before income taxes.The income tax rate for 2014 was 30 percent.Ryan had an unused $65,000 net operating loss carryforward arising in 2013 when the tax rate was 35 percent.The income tax expense Ryan would report for 2014 would be

Which of the following items results in a temporary difference deductible amount for a given year?

Which of the following is the most likely item to result in a deferred tax asset?

Which of the following is an example of a temporary difference that would result in a deferred tax liability?

Which of the following statements is NOT correct?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters