Name some reasons why the taxable income of a corporation is likely not to be the same as its financial statement net income. a Depreciation expense on the tax return is typically greater than depreciation expense for financial statements. b Accounts payable are usually different. c Net assets are usually larger on the tax return. d ales amounts differ because of Internet sales.

Name some reasons why the taxable income of a corporation is likely not to be the same as its financial statement net income. a Depreciation expense on the tax return is typically greater than depreciation expense for financial statements. b Accounts payable are usually different. c Net assets are usually larger on the tax return. d ales amounts differ because of Internet sales.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

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Problem 17Q

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Corporate taxable income is based on an income statement that is similar to income statements prepared for financial reporting. It has Revenues less expenses equals income. How is the computation for personal taxable income different from this income statement concept? Why do you think these differences exist?
Why do companies choose to accelerate depreciation on their tax return and not on their income statement? a. to avoid paying taxes b. to postpone paying taxes c. to match their GAAP financial statements
Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification. A. Non-deductible expenses B. Non-taxable revenues C. Deductible temporary difference D. Taxable temporary difference Interest earned on investments in tax-exempt government securities. Interest earned on deposits with bank. Excess of profit earned over the profit reported under the installment method for income tax purposes.
Indicate whether the following statements is true or false. Provide the relevant explanations. In the presence of corporate taxes, a company would prefer to raise debt only when the benefits of the tax shield fully offset the cost of debt. (Explain your reasoning – in your explanation, provide a numerical example supporting your answer.)
The IRS requires companies that use LIFO for financial statement reporting to also use LIFO to calculate cost of goods sold on their tax returns. Why do you think the IRS wants companies to be consistent with the cost-flow assumption they use? What benefit could a company receive by choosing a different method for reporting than for its tax return?
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.
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.
QUESTION: A person wonders why the profit after tax is not the same as the cash flows from operating activities. Explain to a person two reasons why these two numbers are usually different and provide an example for each difference?
In computing net business income for income tax purposes, which of the following statements is INCORRECT? Question 3Answer a. Income tax paid is not allowed as a business deduction. b. Depreciation is not allowed as a business deduction. c. Capital cost allowance is not allowed as a business deduction. d. An arbitrary reserve is not allowed as a business deduction.
TRUE OR FALSE The change in Gross Income will have the same changes to Taxable Net Income because of their direct relationship. Cost of Equity by way of paying dividends, which is deductible from gross income. Interest paid in advance for the amount borrowed by the business has no tax benefit.
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.
When income tax expense differs from income taxes currently payable on taxable income companies recognize deferred tax assets and deferred tax liabilities. What type of event would create a deferred tax asset and deferred tax liability? Please provide numerical examples. Discuss the two principal reasons income before taxes for financial reporting differs from taxable income. Please provide an argument over the life of the assets deferred liabilities and deferred assets cancel each other out. Use minimum two in text citation that must match peer reviewed references

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a	Depreciation expense on the tax return is typically greater than depreciation expense for financial statements.
b	Accounts payable are usually different.
c	Net assets are usually larger on the tax return.
d	ales amounts differ because of Internet sales.