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GAAP regarding accounting for income taxes requires the following procedure:

A. Computation of deferred tax assets and liabilites based on temporary differences

which of the following causes a temporary difference between taxable and pretax accounting income?

B. MACRS used for depreciating equipment

Which of the following differences between financial accounting and tax accounting ordinarily creates deferred tax liability/

C. Prepaid rent

A result of interperiod tax allocation is that

c. the income tax expense in the income statemetn is the sum of the income taxes payable for the year and the changes in deferred tax asset or liability balances for the year

which of the following creates a deferred tax liability

b.accelerated depreciation in the tax return

Which of the following circumstances creates a future taxable amount?

C. straight line depreciation for financial reporting and accelerated depreciation for tax reporting

which of the following usually results in an increase in a deferred tax liabiliyt?

c. prepaid operating expenses.

for its first year of operations Tringali corporation's reconciliation of pretax accounting income to taxable income is as follows: trigali's tax rate is 40%. assume that no estimated taxes have been paid. what should tringali report as income tax payable for its first year of operations

c. 106,000

for its first year of operations tringali corporation's reconciliation of pretax accounting income to taxable income is as follows: Trigali's tax rate is 40$. what should tringali report as its deferred income tax liability as of the end of its first year of operations?

D 8000

For its first year of operations tringali corporation's reconciliation of pretax accounting income to taxable income is as follows: tringali's tax rate is 40%. what should tringali report as its income tax expnense for its first year of operations?

B. 114000

Isaac inc. began operations in january 2011. for certain of its property sales, isaac recognizes income in the period of sale for financial reporting purposes. however, for income tax purposes, isaac recognizes income when it collects cash from the buy'ers installment payments. in 2011, isaac had 600 million in sales of this type. scheduled collections for these sales are as follows. assume that isaac has a 30% income tax rate and that there were no other differences in income for financial statement and tax purposes

This is a question that has many parts. look down

ignoring operating expenses, what deferred tax liability would isaac report in its year end 2011 balance sheet?

b. 162 million

ignoring operating expenses and additional sales in 2012, what deferred tax liability would isaac report in its year end 2012 balance sheet?

c. 126 million

suppose that in 2012 legislation revised the income tax rates so taht isaac would be taxed in 2013 and beyond at 40% rather than 30%. assume that there were no other differences in incoem for financial statement and tax purpsoes. ignoring oeprating expenses and additional sales in 2012, what deferred tax liability would isaac report in its year end 2012 balance sheet?

a. 168 million

in the statement of cash flows, using the indirect method for determining cash flows from operating activities, a decrease in deferred tax liabilities is

b. subracted from net income

which of the following statements is true as to GAAP regarding accounting for income taxes, and its use of the asset and liability approach?

c. the approach is consistent with a balance sheet emphasis of US GAAP and IASB accounting standards.

Franklin's taxable income in millions is

b. 165

franklin freightways experienced a current

a. tax liability of 66

franklin's net income is

d. 118

which of the following must franklin freightways disclose related to the income tax expense reported in the income statement (in millions)?

c. both the current portion of the tax expense of 66 and the deferred portion of the tax expense of 16

franklin's balance sheet at the end of its first year would report

a. a deferred tax liability of 16 among nocurrent liabilities

woody corp had taxable income of 8000 in the current year. the ammount of MACRS depreciation was 3000 while the amount of depreciation reported in the statement was 1000. assuming no other differences lbetween tax and accounting income, woody's pretax ccounting income was

c. 10000

alamo inc. had 300 million in taxable income for the current year. alamo also had a decrease in deferred tax assets of 30 millino and an increase in deferred tax liabilites of 60 million. the company is subject toa tax rate of 40%. the total income tax expense for the year was

b. 210 million

during the current year, stern company had pretax accounting income of 45 million. stern's only temporary difference for the year was rent received for the following year in the amount of 15 million. stern's taxable income for the year would be

60 million

What should be the balance in kent's deferred tax liability account as of december 31, 2011?

b. 7500

what should kent report as the current portion of its income tax expense in the year 2011?

a. 45900

what wuold kent's income tax expense be in the year 2011?

b. 48200

of the following temporary differences, which one ordinarily creates a deferred tax asset?

c. accrued warranty expense

using straight line depreciation for financial reporting purposes and MACRS for tax purposes in the first year of an asset's life creates a

d. deferred tax liability

a deferred tax asset represents a

a. future income tax benefit

of the following temporary differences, which one ordinarily creates a deferred tax asset?

c. rent received in adnvace

which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax asset?

b. revenue collected in advance

which of the following creates a deferred tax asset?

a. an unrealized loss from recording investments at fair value

which of the following circumstances creates a future deductible amount?

d. accrued warranty expenses

estimated employee compensation expenses earned during the current period but expected to be paid in the next period casses

a. an increase in a deferred tax asset

a magaine publisher collects one year in advance for subscription revenue. in the year of providing the magazines to customers, the company would record:

b. a decrease in a deferred tax asset

in 2011, magic table inc, decides to add a 36 month warranty on its new product sales. warranty costs are tax deductible when claims are settled. in its financial statements for 2011. magic table inc incurs:

a. an increase in a deferred tax asset

which of the following usually results in an increase in a deferred tax asset?

D. none of the above is correct

at the end of the current year, newsmax inc. has 400,000 of subscriptions received in advance included in its balance sheet. a footnote revealst that the entire 400,000 will be earned in the next year. in the absence of other termporary differences, in the balance sheet one would also expect to find a

d. current deferred tax asset

the valuation allowance account that is used in conjunction with deferred tax asset is a

d. contra asset

the valuation allowance account that is used in conjuntion with deferred taxes relates

c. only to deferred tax asset

in 2010, HD had reported a deferred tax asset of 90 million with no valuation allowance. at december 31, 2011 the account balances of HD services showed a deferred tax asset of 120 million before assessing the need for a valuation allowance and income taxes payable of 80 million. HD determined that it was more likely than not that 30% of the deferred tax asset ultimately would not be realized HD made no estimated tax payments during 2011. what mount should HD report as income tax expense in its 2011 incomes statement?

C. 86 million

for classification purposes, a valuation allowance

b. is allocated proportionately between the current and non current portions of the deferred tax asset

which of the following cuases a permanent difference between taxable income and pretax accounting income?

C. interest income on municipal bonds

in reconciling net income to taxable income, interest earned on municipal bond is

d. a permanent difference

which of the following causes a difference between taxable income and pretax accounting income?

D. interest earned on municipal securities

which of the following would never require reporting deferred tax assets or deferred tax liabilities?

c. life insurance premiums

when tax rates are changed subsequent to the creation of a deferred tax asset or liability, GAAP requires that

a. all deferred tax accounts be adjusted to reflect the new tax rates.

pretax accounting income for the year ended december 31, 2011, was 50 million for truffles company. truffle's taxable incoem was 60 million. this was a result of differences between straight line depreciation for financial reporting purposes and MACRS for tax purposes. the enacted tax rate is 30% for 2011 and 40% thereafter. what amount should truffles report as the current portion of income tax expense for 2011?

b. 18 million

the financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by 150,000 at december 31, 2011. this was a result of differences between straight line depreciation for financial reporting purposes and MACRS for tax purposes. the asset was acquired earlier in the year Boze has no other temporary differences. the enacted tax rate is 30% for 2011 and 40% thereafter. Boze should report the deferred tax effect of this differencei n its december 31, 2011 balance sheet as

b. a liability of 60,000

the effect of a change in tax rates

d. is reflected in income from continuing operations

giada foods reported 940 million in income before income taxes for 2011, its first year of operations. tax depreciation exceeded depreciation for financial reporting purposes by 100 million. the company also had non tax deductible expenses of 80 million relating to permanent differences. the income tax rate for 2011 was 35%, but the enacted rate for years after 2011 is 40%. the balance inthe deferred tax liabilty in the december 31, 2011, balance sheet is

c. 40 million

in its first year of operatinos woodmount corporation reported pretax accounting income of 500 million for the current year. deprecition reported in the tax return in excess of depreciation in lthe income statement was 60 million. the excess tax will reverse itself evely over the next three years. the current year's tax rate of 40% will be reduced under the current law to 35% next year and 30% for all subsequent years. at the end of the current year, the deferred tax liability related to the excess depreciation will be

d. 19 million

Bumble Bee Co. had taxable income of 7000. MACRS depreciation of 5000, book depreciation of 2000, and accrued warranty expense of 400 on the books although no warranty work was performed. what is bumble bee's pretax accounting income?

c. 9600

For the current year, centipeded cor had 80 in pretax accounting income. this included bad debt expense of 6 based on the allowance method, and 20 in depreciation expense. two million in receivables were written off as uncollectible, and MACRS depreciation amounted to 35. in the absence of other temporary or permanent differences ,what was Centipede's income tax payable currently, assuming a tax rate of 40%?

C. 27.6 million...

For the current year, centipeded cor had 80 in pretax accounting income. this included bad debt expense of 6 based on the allowance method, and 20 in depreciation expense. two million in receivables were written off as uncollectible, and MACRS depreciation amounted to 35. in the absence of other temporary or permanent differences, waht was centipede's taxable income?

b. 69 million

Under current tax law, generally a net operating loss may be carried back:

A. 2 years

Under current tax law a net operating loss may be carried forward up to

d. 20 years

if a company's deferred tax asset is not reduced by a valuation allowance, the company believes it is more likely than not that

c. sufficient taxable income will be generated in futuer years to realize the full tax benefit

a net operating loss carrforward cannot result in the balance sheet at the end of the NOL year showing:

a. a receivable under current assets for an income tax refund

the tax effect of a net operating loss carryback usually

a. results in a current receivable at the end of the NOL year

recognizing tax benefits in a loss year due to a net oeprating loss carryforward requires

c. creating a deferred tax asset

In its first four years of operations peridot jewelers reported the following operating income amounts....
There were no other deferred income taxes in any year. in 2010, peridot elected to carry back its operating loss. the enacted income tax rate was 40%. in its 2011 income statement, what amount should peridot report as income tax expense?

D. 180,000

The Kelso Company had the following oeprating results:
Year Income tax rate income tax
2009 30000 35% 10500 first year of operations
2010 45,000 30% 13500
2011 (60,000) 30% 0
What is the income tax refund receivable?

B. 19500

In 2011, odily Corporation reported 300,00 pretax accounting income. the income tax rate for that year was 30%. Bodily had an unused 120000 net operating loss carryforward from 2009 when the tax rate owas 40%. Bodily's income tax payable for 2011 would bw

a. 54,000

in its first three years of operations Sharp chairs reported the following operating income (loss) amounts:
There were no deferred income taxes in any year. in 2010, sharp elected to carry back its operating loss. the enacted income tax rate was 35% in 2009 and 40% thereafter. in its 2011 balance sheet, what amount should sharp report as current income tax payable?

C. 1440000

In its first four years of operations Peridot Jewelers reported the following operating income (loss) amounts
There were no other deferred income taxes in any year. in 2010, peridot elected to carry back its oeprating loss. the enacted income taxx rate was 40%. in its 2011 income statement, what amount should peridot report as current income tax payable?

B. 110000

According to GAAP for accounting for income taxes, when a company has a net operating loss carryforward:

D. A deferred tax asset is recorded along with any applicable valuation allowance.

puritan corp. reported the following pretax accounting income and taxable income for its first three years of operations:
Puritan's tax rate is 40% for all years. as of december 31, 2011 puritan was certain that it would recover the full tax benefit of the NOL that remained after the operating loss carryback. what would puritan report as net income for 2012?

b. 420,000

Puritan corp reported the following pretax accounting income and taxable income for its first three years of operations
Puritan's tax rate is 40% for all years. puritan elected a loss carryback. puritan was certain it would recover the full tax benefit of the NOL. What did it report on December 31, 2011 as the deferred tax asset for the NOL carryforward?

C. 100,000

Puritan Corp. reported the following pretax accounting income and taxable income for its first three years of operations.
Puritan's tax rate is 40% for all years.
assuming that puritan elected a loss caryback, what would be the net loss in 2011 reported in Puritan's income statement?

A. 360,000

Before considfering a net operating loss carryforward of 80 million, fama corporation reported 200 million of pretax accounting and taxable income in the current year. the income tax rate for all previous years was 40%. On January 1 of the current year a new tax law was enacted, reducting the rate to 30% effective immediately. Fama's income tax payable for the current year would be

D. 36 million

Reliable Corp. had a pretax accounting income of 30 million this year. this included the collection of 40 million of life insurance proceeds when several key executives died in a plane crash. temporary differences for the current year netted out to zero. Reliable has had a 40% tax rate and taxable income of 120 million over the previous two years and plans to elect an operating loss carryback for any NOL. In the current year financial statements, Reliable would report:

A. Net income of 34 million

Theodore Enterprises had the following pretax income (loss) over its first three years of oeprations:
For each year there were no deferred income taxes and teh tax rate was 30%. In its 2010 tax return, theodore elected a loss carryback. no valuation account was deemed necessary for the deferred tax asset as of december 31, 2010. what was theodore's income tax expense for 2011?

A. 450,000

Clinton Corp. had the following pretax income (loss) over its first three years of operations:
For eac hyear there were no deferredi ncome taxes and the tax rate was 40%. for its 2010 tax return, clinton did not elect a loss carryback. no valuation account was deemed necessary for the deferred tax asset as of december 31, 2010. what was clinton's income tax expense in 201?

a. 600,000

for reporting purposes, current deferred tax assets and current deferred tax liabilites are

a. netted against one another in the balance sheet

Financial statement disclosure of the components of income tax expense:

B. Usually is included in the foot notes.

At December 31 2011 moonlight bay resorts had the following deferred income tax items:
Deferred tax assets of 54 million

B. Current tax liability of 18000

Due to differences between depreciation reported in the income statement and depreciation deducted for tax purposes, lucas corp has two millino dollars in temporary differences that will increase taxable income next year. assuming that lucas has no other temporary differences, deferred income taxes should be reported in this year's ending balance sheet as a

B. Noncurrent deferred tax liabilyt

A reconciliation of pretax financial statement income to taxable income is shown below for Fieval Industries for the year ended December 31 2011 its first year of operations. the income tax rate is 40%
What amount should Fieval report related to deferred incoem taxes in its 2011 balance sheet?

A. Current asset of 10,000 and non current liabiliyt of 28000

A reconciliation ofpretax financial statement income to taxable income is shown below for Sec Shipping for the year ended December 31, 2011, its first year of operations. the income tax rate is 40%
What amount should See report as a current item related to deferred income taxes in its 2011 balance sheet?

D. Deferred income tax liabilyt of 10,000

On its tax return at the end of the current year Webnet Inc. has 6 million of tax depreciation in excess of depreciation in its income statement. a footnote reveals that 1 million of the 6 million difference will reverse itself next year, and the remainder will reverse ofver the nxt 4 years. in the absence of other temporary differences, in the balance sheet at the end of the current year Webnet would report:

D. A noncurrent deferred tax liability

How much tax on income from continuing operations would be reported in Hobson's income statement?

C 62 million

What should Hobson International report as income from continuing operations?

C. 88 million

What should Hobson International report as net income?

70 million

What is Hobson's income tax payable for the current year?

D. 44 million

How should Hobson International report tax on the extraordinary item?

B. A tax benefit of 12 million to net against the 30 million pretax loss.

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