Of the following temporary differences, which one ordinarily creates a deferred tax asset?O Installment sales for tax reporting.O Fines paid for violation of law.O Prepaid expenses.O Estimated warranty expense.

A deferred tax asset arises when a company has paid taxes in advance or paid more taxes than…

Answered: Of the following temporary differences,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Recognition of tax benefits in the loss year due to a NOL carry back involves: O The establishment of an income tax refund receivable. Only a note to the financial statements. The establishment of a deferred tax liability. O The establishment of a deferred tax asset.
A deferred tax account is classified on the balance sheet as: A net noncurrent amount A net current amount It should never appear on the balance sheet Either a current or a noncurrent liability
Listed below are items that are treated differently for accounting purposes than they are for tax purposes. Indicate whether the items are permanent differences or temporary differences. For temporary differences, indicate whether they will create deferred tax assets or deferred tax liabilities. 1. Investments accounted for by the equity method (ignore dividends received deduction). 2. Advance rental receipts. 3. Fine for polluting. 4. Estimated future warranty costs. 5. Excess…
Title Which of the following is false? (a) Under GAAP, deferred taxes are reported based on the... Description Which of the following is false? (a) Under GAAP, deferred taxes are reported based on the classification of the asset or liability to which it relates. (b) Under IFRS, some potential liabilities are not recognized. (c) Under GAAP, the enacted tax rate is used to measure deferred tax assets and liabilities. (d) Under IFRS, all deferred tax assets and liabilities are classified as non-current.
All are true except: a. OSD is a substitute for itemized deduction. b. The OSD relieves the taxpayer of the responsibility to deduct withholding taxes. c. Taxpayers who choose OSD are not required to submit their financial statements with their ITR. d. The option to claim OSD must be signified in the income tax return, otherwise, itemized deduction is presumed
Expenditures currently deducted in the tax return but not included with expenses in the income statement until subsequent years create deferred tax liabilities. O True O False
* Your answer is incorrect. All of the following are procedures for the computation of deferred income taxes except to determine taxes payable. measure the total deferred tax liability for deductible temporary differences. • measure the total deferred tax liability for taxable temporary differences. identify the types and amounts of existing temporary differences.
Recognition of tax benefits in a loss year due to a loss carryforward requires A) the establishment of a deferred tax liability. B) only a note to the financial statements. OC) the establishment of an income tax receivable. OD) the establishment of a deferred tax asset.
20. A temporary difference arises when a revenue item is reported for tax purposes in a period After it is reportedin financial income Before it is reportedin financial income No Yes No No Yes No Yes Yes
An unused tax loss will arise when: a. Expenses deductible for tax purposes are less than the taxable income b. Expenses deductible for tax purposes exceeds the taxable income. c. Expenses deductible for tax purposes are equal to the taxable income d. Expenses deductible for tax purposes do not exist.
1 contiune Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.For each item below, indicate whether it involves: 1. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3. A permanent difference. (e) Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes.(f) For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are shorter for tax purposes.(g)…
1. Bad debt is an expense in the books of accounts when a provision is made for it. Such amount should likewise be deducted from gross income to arrive at taxable income. 2. The phrase "actually charged off from taxpayer's book of accounts" means that the amount of money lent by the taxpayer (in the course of his business, trade or profession) to his debtor that had been recorded in the books of account as receivable has actually become worthless as of the end of the taxable year, and that the said receivable has been cancelled and written off from the said taxpayer's books of accounts. A= 1st statement is true, second statement is false. B= 1st statement is false, second statement is true. C= Both statements are false. D= Both statement are true. с B OA D

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Of the following temporary differences, which one ordinarily creates a deferred tax asset? O Installment sales for tax reporting. O Fines paid for violation of law. O Prepaid expenses. O Estimated warranty expense.