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- 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.Which of the following may not be an effect of VAT on the accounting records of a company? The formation of a payable under the current liabilities An addition to the cost of a purchase The formation of a tax asset arising from a sale A receivable from the government arising from a sale All of the other choices may be an effect of VAT.What is the depreciation method that is used for tax accounting purposes? How is it different than the methods that are required by GAAP to be used for financial accounting purposes?
- When a company records a deferred tax asset, it may need to also report a valuation allowance if it is “more likely than not” that some portion or all of the deferred tax asset will not be realized. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 1. Obtain the relevant authoritative literature on disclosure requirements pertaining to how a firm should determine whether a valuation allowance for deferred tax assets is needed using the FASB’s Codification Research System at the FASB website (www.fasb.org). What is the specific citation that describes the guidelines for determining the disclosure requirements? 2. What are the guidelines?. What is the possible treatment for tax purposes of a net operating loss? What is the proper treatment of a net operating loss for financial reporting purposes?Which of the following is a temporary difference that normally is recognized for accounting purposes before being reported as an expense for tax purposes? Unearned revenue Product warranty costs Depreciation Fines resulting from violations of the law.
- Which of the following statements is true? A.) A company must use FIFO for both tax reporting and financial statement reporting. B.) A company may use FIFO to valuate inventory and LIFO for financial statement reporting purposes. C.) LIFO must be used for financial reporting if it is used for tax purposes. D.) Application of LIFO for financial reporting purposes must follow the tax laws applicable to LIFO.What are the possible treatments for tax purposes of anet operating loss? What are the circumstances thatdetermine the option to be applied? What is the propertreatment of a net operating loss for financial reportingpurposes?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.Which depreciation method is most common for financial reporting? Which depreciation method is most common for tax reporting? Why do companies choose these methods?Which of the following may not be an effect of VAT on the accounting records of a company? i. The formation of a payable under the current liabilities ii. An addition to the cost of a purchase iii. The formation of a tax asset arising from a sale iv. A receivable from the government arising from a sale v. All of the other choices may be an effect of VAT.
