Você está na página 1de 17

CHAPTER19 SELFTTEST

1.Income tax payable is based (computed) on: pretax financial income. income for book purposes. taxable income. income before taxes.

2.Taxable amounts are temporary differences that: require the recording of a deferred tax asset. decrease taxable income in future years. require the recording of a deferred tax liability. increase pretax financial income in future years.

3.Which of the following statements related to a deferred tax liability is incorrect? It is a future obligation. It represents a future sacrifice. All of the options are correct. It results from a past transaction.

4.Future deductible amounts will cause: the recording of a deferred tax liability. a decrease in pretax financial income in future years. the recording of a deferred tax asset. taxable income to be more than pretax financial income in the future.


5.Which of the following will be reduced if it is probable that some or all of the tax benefit may not be realized? income tax expense a deferred tax liability only both a deferred tax asset and deferred tax liability a deferred tax asset only

6.Income tax expense is computed as income tax payable: less a decrease in a deferred tax asset. plus or minus the change in deferred income taxes. plus or minus the change in provision for income taxes. less an increase in a deferred tax liability.

7.All of the following are examples of temporary differences that result in taxable amounts in future years except: installment sales. long-term construction contracts. investments accounted for under the equity method. subscriptions received in advance.

8.Which of the following is not a permanent difference? Litigation accruals. Fines resulting from a violation of law. Proceeds from life insurance carried on key officers. Interest received on municipal obligations.


9.Deferred income taxes are based on the: future tax rates in all cases. future tax rates if they have been enacted into law. current tax rate or future tax rates, depending on when the temporary difference will reverse. current tax rate in all cases.

10.A net operating loss: occurs when a company reports a net loss in their income statement. may be carried back 2 years or carried forward up to 20 years. must always be carried back 2 years. must always be carried forward 20 years.

11.Which of the following statements related to loss carrybacks and carryforwards is correct? The benefit due to a loss carryback is reported only in the second year preceding the loss year. The benefit due to a loss carryforward can be reported in both the loss year and future years. The benefit due to a loss carryforword is reported only in the loss year. The benefit due to a loss carryback can be reported in both the loss year and future years.

12.Deferred income taxes are usually classified as: current assets or current liabilities. current or noncurrent based on the classification of the related asset (liability) for financial reporting purposes. current or noncurrent according to the expected reversal date of the temporary difference. noncurrent assets or noncurrent liabilities.

13.Income tax expense should be allocated to all of the following except: prior period adjustments. discontinued operations. unusual or infrequent items. continuing operations.

14.All of the following are possible sources of taxable income available to realize a tax benefit for deductible temporary differences except: taxable income in prior carryback years if carryback is permitted. tax planning strategies that would accelerate taxable amounts to utilize expiring carryforwards. future taxable income exclusive of reversing temporary differences. future reversals of existing deductible temporary differences.

15.The last procedure (step) in the computation of deferred income taxes is to: identify the types and amounts of existing temporary differences. measure deferred tax assets for each type of tax credit carryforward. measure the total deferred tax asset (liability) using the appropriate tax rate. reduce deferred tax assets if necessary.

16.When accounting for income taxes, the differences between IFRS and U.S. GAAP involve: a few exceptions to the asset-liability approach. some minor differences in the recognition, measurement, and disclosure criteria. differences in implementation guidance. All of these options are differences in the accounting for income taxes.

17.

18. 19. 20. 21. 23. 24. ADDITIONALSELFTEST


1.Pretax financial income is determined according to the tax regulations of the jurisdiction in which the company operates. False True

2.A deferred tax liability represents the increase in taxes payable in future years as a result of a taxable temporary difference. True False

3.Permanent differences result in deferred tax consequences. True False

4.A loss carryback may be foregone and used as a loss carryforward for up to 20 years. True False

5.The Deferred Tax Asset account should be evaluated at the end of each accounting period. False

True

6.Proceeds from life insurance carried by the company on key officers or employees is an example of a temporary difference. True False

7.A deferred tax asset is the deferred tax consequence attributable to deductible temporary differences. True False

8.A deferred tax liability is the deferred tax consequence attributable to taxable temporary differences. True False

9.Taxable temporary differences give rise to recording deferred tax assets. False True

10.Subscriptions received in advance will result in taxable amounts in future years. True False

11.IFRS on income taxes is based on the different principles than U.S. GAAP. True False

12.Income tax expense is based on:

taxable income. pretax income. operating income. income from continuing operations.

13.Deferred tax expense is the: increase in a deferred tax liability. decrease in a deferred tax asset. decrease in a deferred tax liability. None of the above.

14.A deferred tax liability represents the: decrease in taxes saved in future years as a result of deductible temporary differences. increase in taxes saved in future years as a result of deductible temporary differences. increase in taxes payable in future years as a result of taxable temporary differences. decrease in taxes payable in future years as a result of taxable temporary differences.

15.A deferred tax asset represents the: increase in taxes saved in future years as a result of deductible temporary differences. decrease in taxes saved in future years as a result of deductible temporary differences. decrease in taxes payable in future years as a result of deductible temporary differences. increase in taxes payable in future years as a result of deductible temporary differences.

16.The adjustment made to the deferred tax asset account for tax benefits which the company will probably not realize will:

reduce a deferred tax asset and increase income tax expense in the current year. reduce a deferred tax liability and reduce income tax expense in the current year. increase a deferred tax asset and decrease income tax payable in the current year. increase a deferred tax liability and increase income tax payable in the current year.

17.All of the following are examples of temporary differences that result in tax deductions in future years, except: depreciable property. estimated liabilities related to discontinued operations. product warranty liabilities. litigation accruals.

18.Which of the following is not an example of a temporary difference that will result in a deductible amount in future years? Installment sales. Advanced rental receipts. Unearned subscriptions. Royalties received in advance.

19.Which of the following is a permanent difference? Deductible pension funding exceeding expense. Product warranty liabilities. Fines levied for violation of environmental regulations. Installment sales accounted for on an accrual basis.

20.Which of the following is true with regard to accounting for income taxes under IFRS and US GAAP ?

IFRS classifies deferred tax assets and liabilities as noncurrent while US GAAP bases the classification on the asset or liability to which it relates. Both IFRS and US GAAP use a valuation account to adjust deferred tax assets. Accounting for income taxes under IFRS follows the asset-liability method while the rules under US GAAP follow the temporary-permanent model. Both IFRS and US GAAP use an impairment approach to valuing deferred tax assets.

21.The IASB believes that the most consistent method for accounting for income taxes is the: asset-liability method. temporary-permanent method. benefit-obligation method. carryback-carryforward method.

23. 24. HOMEWORK 1.


(Two Temporary Differences, One Rate, Beginning Deferred Taxes) The following facts relate to Alschuler Corporation. 1. Deferred tax liability, January 1, 2010, $40,000. 2. Deferred tax asset, January 1, 2010, $0. 3. Taxable income for 2010, $115,000. 4. Pretax financial income for 2010, $200,000. 5. Cumulative temporary difference at December 31, 2010, giving rise to future taxable amounts, $220,000. 6. Cumulative temporary difference at December 31, 2010, giving rise to future deductible amounts, $35,000. 7. Tax rate for all years, 40%. 8. The company is expected to operate profitably in the future.

Your answer is correct.

Compute income taxes payable for 2010. $ 46000

Your answer is correct.

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2010. (List mult largest to smallest amount, e.g. 10, 5, 3, 2.) Account/Description Debit Income tax expense Deferred tax asset Deferred tax liability Income tax payable 80000 14000

Your answer is correct.

Prepare the income tax expense section of the income statement for 2010, beginning with the line Income before income tax positive amounts and subtract where necessary.) Income before income taxes Income tax expense Current Deferred Net income $ 46000 34000

2.
E19-15

(Deferred Tax Asset) Callaway Corp. has a deferred tax asset account with a balance of $150,000 at the end of 2010 due to a single cumulative temporary difference of $375,000. At the end of 2011, this same temporary difference has increased to a cumulative amount of $500,000. Taxable income for 2011 is $850,000. The tax rate is 40% for all years.

Your answer is correct.

Record income tax expense, deferred income taxes, and income taxes payable for 2011, assuming that it is probable that $20, will be realized in full. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Income Tax Expense 290000

Record income tax expense, deferred income taxes, and income taxes payable for 2011, assuming that it is probable that $20, will be realized in full. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Income Tax Expense Deferred Tax Asset Income Tax Payable (To record income tax payable.) Income Tax Expense Deferred Tax Asset (To record deferred tax.) 180000 290000 50000

Your answer is correct.

Record income tax expense, deferred income taxes, and income taxes payable for 2011, assuming that it is probable that none be realized. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Income Tax Expense Deferred Tax Asset Income Tax Payable (To record income tax payable.) 290000 50000

Income Tax Expense Deferred Tax Asset (To record deferred tax.)

200000

3.

E19-17

Your answer is correct.

(Two Temporary Differences, Tracked through 3 Years, Multiple Rates) Taxable income and pretax financial income would be identical for Jones Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared. Taxable income 2010 2011 2012 Excess of revenues over expenses (excluding two temporary differences) Installment income collected Expenditures for warranties Taxable income $160,000 $210,000 $90,000

8,000 (5,000) $163,000

8,000 (5,000) $213,000

8,000 (5,000) $93,000

Pretax financial income Excess of revenues over expenses (excluding two temporary differences)

2010

2011

2012

$160,000

$210,000

$90,000

Installment gross profit earned Estimated cost of warranties Income before taxes

24,000 (15,000) $169,000

0 0 $210,000

0 0 $90,000

The tax rates in effect are: 2010, 45%; 2011 and 2012, 40%. All tax rates were enacted into law on January 1, 2010. No deferred income taxes existed at the beginning of 2010. Taxable income is expected in all future years. Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2010, 2011, and 2012. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Date Description/Account Debit Credit 12/31/10 Income Tax Expense Deferred Tax Asset Income Tax Payable Deferred Tax Liability 12/31/11 Income Tax Expense Deferred Tax Liability Income Tax Payable Deferred Tax Asset 12/31/12 Income Tax Expense Deferred Tax Liability Income Tax Payable Deferred Tax Asset 36000 3200 37200 2000 84000 3200 85200 2000 75750 4000 73350 6400

4.
E19-24

(NOL Carryback and Carryforward, Non-Recognition) Nielson Inc. reports the following pretax income (loss) for both book and tax purposes. (Assume the

carryback provision is used where possible for a net operating loss.) Year Pretax Income (Loss) 2009 2010 2011 2012 100,000 90,000 (240,000) 120,000

Tax Rate 40% 40% 45% 45%

The tax rates listed were all enacted by the beginning of 2009.

Your answer is correct.

Prepare the journal entries for years 20092012 to record income tax expense (benefit) and income tax payable (refundable), carryforward, assuming that based on the weight of available evidence it is probable that one-half of the benefits of the loss c debit/credit entries from largest to smallest amount, e.g. 10, 5, 3, 2. If amounts are the same, list alphabetically.) Date Description/Account 2009 Income Tax Expense Income Tax Payable 2010 Income Tax Expense Income Tax Payable 2011 Income Tax Refund Receivable Deferred Tax Asset Benefit Due to Loss Carryback Benefit Due to Loss Carryforward 2012 Income Tax Expense Income Tax Payable

Benefit Due to Loss Carryforward Deferred Tax Asset

Your answer is correct.

Prepare the income tax section of the 2011 income statement, beginning with the line Operating loss before income taxes. (For loss, use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45). Enter all other amounts as positive amounts and subtract when necessary.) Partial Income Statement for 2011 Operating loss before income taxes Income tax benefit Benefit due to loss carryback Benefit due to loss carryforward Net loss 76000 11250 87250 -152750 -240000

Your answer is correct.

Prepare the income tax section of the 2012 income statement, beginning with the line Income before income taxes. (For Benefit due to loss carryforward, use either negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45). Enter all other amounts as positive amounts and subtract when necessary.) Partial Income Statement for 2012 Income before income taxes Income tax expense Current Deferred Benefit due to loss carryforward Net income 31500 11250 -11250 31500 88500 120000

5.