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Gleim Unit 10
Terms in this set (4)
For the year ended December 31, Tyre Co. reported pretax financial statement income of $750,000. Its taxable income was $650,000. The difference is due to accelerated depreciation for income tax purposes. Tyre's effective income tax rate is 30%, and Tyre made estimated tax payments during the year of $90,000. What amount should Tyre report as current income tax expense for the year?
According to U.S. GAAP, which of the following items should affect current income tax expense for Year 3?
A. Interest on a Year 1 tax deficiency paid in Year 3.
B. Change in income tax rate for Year 4.
C. Penalty on a Year 1 tax deficiency paid in Year 3.
D. Change in income tax rate for Year 3.
D (Change in income tax rate for Year 3.)
The relationship between income tax currently payable and income tax expense is that income tax currently payable
A. May be greater than but not less than income tax expense.
B. May differ from income tax expense.
C. May be less than but not greater than income tax expense.
D. Is always equal to income tax expense.
B (May differ from income tax expense.)
In its first 4 years of operations, Alder, Inc.'s depreciation for income tax purposes exceeded its depreciation for financial statement purposes. This temporary difference was expected to reverse over the next 3 years. Alder had no other temporary differences. Alder's balance sheet for its fourth year of operation should include
A. A noncurrent deferred tax liability only.
B. Both current and noncurrent deferred tax assets.
C. A current deferred tax liability only.
D. A noncurrent contra asset for the effects of the difference between asset bases for financial statement and income tax purposes.
A ( A noncurrent deferred tax liability only.)
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