A company reduces a deferred tax asset by a valuation allowance if it is probable that it will not realize some portion of the deferred tax asset true or false
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A company reduces a
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- When certain expenditures result in tax credits that directly reduce taxes, the companywill most likely record:A . a deferred tax asset.B . a deferred tax liability.C . no deferred tax asset or liability.A reduction in the statutory tax rate would most likely benefi t the company’s:A . income statement and balance sheet.B . income statement but not the balance sheet.C . balance sheet but not the income statement.A company receives advance payments from customers that are immediately taxable butwill not be recognized for accounting purposes until the company fulfi lls its obligation.Th e company will most likely record:A . a deferred tax asset.B . a deferred tax liability.C . no deferred tax asset or liability.
- When a company reports a deferred tax asset it means that the company will receive a tax benefit in the future. true or falseWhich of the following statements is NOT correct? A. Taxable income and accounting profit may differ due to differences between the recognition of revenue and expenses for tax and accounting purposes. B. Deferred tax assets must be assessed for the probability of their recovery. Creation of a deferred tax asset or liability occurs only if it reverses at some future date. OC. Deferred tax assets and liabilities may arise due to temporary differences between accounting profit and taxable income. D. Deferred tax liabilities may arise due to permanent differences between accounting profit and taxable income.Deferred tax assets must be reduced by a valuation allowance if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Which of the following kinds of evidence is considered in making this determination? Positive Negative Evidence Evidence A. Yes Yes B. No Yes C. No No D. Yes No
- Unrealized losses on investments create a deferred tax liability in the period they first arise. True or falseWill the existence of unused tax losses always lead to the recognition of a deferred tax assets? Explain your answer with suitable example.Explain when a firm may recognize a deferred tax asset under SFAS No. 109. Howshould deferred tax assets that are not expected to be realized be accounted for?
- When accounting standards require recognition of an expense that is not permitted undertax laws, the result is a:A . deferred tax liability.B . temporary diff erence.C . permanent diff erence.When accounting standards require an asset to be expensed immediately but tax rulesrequire the item to be capitalized and amortized, the company will most likely record:A . a deferred tax asset.B . a deferred tax liability.C . no deferred tax asset or liability.Carry-forward tax losses create: a. A deductible temporary difference and therefore a deferred tax asset in that the company will pay more tax on future taxable profits. b. A taxable temporary difference and therefore a deferred tax asset in that the company will pay less tax on future taxable profits c. A deductible temporary difference and therefore a deferred tax liability in that the company will pay more tax on future taxable profits. d. A deductible temporary difference and therefore a deferred tax asset in that the company will pay less tax on future taxable profits
