Question 1

FASB Statement No.109 addressed both interperiod and intraperiod tax allocation issues.Discuss both interperiod and intraperiod tax allocation methods.

Accepted Answer

Intraperiod tax allocation allocates inc...

Question 2

When accounting for the current impact of loss carrybacks and carryforwards it is proper to

Accepted Answer

A)  recognize the tax benefit of the operating loss carryback as an asset
B)  recognize the tax benefit of the operating loss carryforward as an asset
C)  recognize the tax benefit of the operating loss carryback as a deferred liability
D)  recognize the tax benefit of the operating loss carryforward as a deferred liability

Question 3

FASB Statement No.109 allows the recognition of a deferred tax asset, subject to an asset impairment test.Discuss what criteria a company should employ to determine whether a deferred tax asset is considered impaired.

Accepted Answer

A valuation allowance is required (or th...

Question 4

The Channelview Company incurred the following expenses in 2010, which are reported differently for financial reporting purposes and taxable income: Estimate of bad debts expense (but not written off)   $40,000 \quad \$ 40,000 $40,000 
  Estimated product warranity costs (but not paic)  20,000 \begin{array}{ll}	ext { Estimated product warranity costs (but not paic)  } & 20,000\end{array}  Estimated product warranity costs (but not paic)  ​20,000​ 
 If the tax rate is 40%, the total temporary difference is

Accepted Answer

A)  $ 20, 000
B)  $ 24, 000
C)  $ 60, 000
D)  $150, 000

Question 5

The Alamo Heights Company installs sprinkler systems for large manufacturing enterprises and golf courses.Due to the design of their systems, some projects frequently extend over a two-year period.Alamo Heights uses the percentage-of-completion method for financial accounting purposes and the completed-contract method for tax purposes.As of December 31, 2010, all projects were completed.The following information relates to projects started but not completed as of December 31, 2011:  Assuming an income tax rate of 30%, what amount should be included in the deferred tax liability account at December 31, 2011?

Accepted Answer

A)  $ 70, 000
B)  $105, 000
C)  $245, 000
D)  $350, 000

Question 6

Briefly describe the four major differences between IFRS and GAAP in the measurement procedures used in accounting for deferred income taxes.

Accepted Answer

The four differences...

Question 7

Assuming there are no prior period adjustments during the fiscal year, net income would be affected by   Interperiod Income  Intraperiod Incom  Tax Allocation  Tax Allocation  I.  Yes  Yes  II.  No  No  III.  Yes  No  IV  No  Yes \begin{array}{lll}&	ext { Interperiod Income } & 	ext { Intraperiod Incom } \&	ext { Tax Allocation } & 	ext { Tax Allocation } \	ext { I. } & 	ext { Yes } & 	ext { Yes } \	ext { II. } & 	ext { No } & 	ext { No } \	ext { III. } & 	ext { Yes } & 	ext { No } \	ext { IV } & 	ext { No } & 	ext { Yes }\end{array} I.  II.  III.  IV ​ Interperiod Income  Tax Allocation  Yes  No  Yes  No ​ Intraperiod Incom  Tax Allocation  Yes  No  No  Yes ​

Accepted Answer

A)  I
B)  II
C)  III
D)  IV

Question 8

Which one of the following statements regarding operating losses is not true?

Accepted Answer

A)  The tax benefit of an operating loss carryback is recognized in the period of loss as a current receivable on the balance sheet.
B)  Temporary differences and operating loss carryforwards are accounted for similarly.
C)  The journal entry to recognize an operating loss carryback would include a credit to Income Tax Benefit from Operating Loss Carryback.
D)  The tax benefit of an operating loss carryforward is to be recognized in the period of loss as a current receivable.

Question 9

For the year ended December 31, 2010, the Huntsville Company reported income of $350, 000 before provision for income tax.In arriving at taxable income for income tax purposes, the following differences were identified:  Assuming a corporate income tax rate of 30%, Huntsville's current income tax liability as of December 31, 2010, is

Accepted Answer

A)  $ 83, 400
B)  $101, 400
C)  $113, 400
D)  $129, 000
E)  none of these

Question 10

All of the following are conclusions reached by the FASB regarding accounting for deferred taxes except

Accepted Answer

A)  the use of a present value approach is acceptable
B)  interperiod tax allocation of temporary differences is appropriate
C)  the comprehensive allocation approach should be applied
D)  the asset/liability method of income tax allocation should be used

Question 11

In 2010, the San Marcos Company received insurance proceeds of $300, 000 payable upon the death of its previous top executive officer.For financial reporting purposes, San Marcos included the $300, 000 in pretax accounting income.The life insurance proceeds are exempt from income taxes.Assuming an income tax rate of 30%, what should be reported as deferred income taxes in the 2010 income statement of San Marcos for this event?

Accepted Answer

A)  $ 0
B)  $ 90, 000 deferred tax asset
C)  $ 90, 000 deferred tax liability
D)  $210, 000 deferred tax liability

Question 12

The amount owed the IRS is recorded in the accounting records in which account?

Accepted Answer

A)  Income Tax Expense
B)  Income Tax Liability
C)  Deferred Tax Expense
D)  Deferred Tax Liability

Question 13

In pushing for comprehensive allocation of income taxes, FASB argued that

Accepted Answer

A)  income tax expense should be based on all permanent differences
B)  income tax expense should be based on all temporary differences
C)  income tax rates expected to be enacted should be taken into consideration when valuing permanent differences
D)  income tax rates expected to be enacted should be taken into consideration when valuing temporary differences

Question 14

Exhibit 19-1 On December 31, 2009, Fort Stockton, Inc.had no temporary differences that created deferred income taxes.On January 2, 2010, a new machine was purchased for $30, 000.Straight-line depreciation over a four-year life (no residual value) was used for financial accounting.Depreciation expense for tax purposes was $11, 000 in 2010, $9, 000 in 2011, $6, 000 in 2012, and $4, 000 in 2013.In each year, the income tax rate was 20% and Fort Stockton had no other items that created differences between pretax financial income and taxable income.Fort Stockton reported the following pretax financial income for 2010 through 2013:
 2010$50,000201140,000201230,000201360,000\begin{array}{ll}2010 & \$ 50,000 \2011 & 40,000 \2012 & 30,000 \2013 & 60,000\end{array}2010201120122013​$50,00040,00030,00060,000​ 
 
-Refer to Exhibit 19-1.The entry to record income taxes on December 31, 2012, would include a

Accepted Answer

A)  debit to Deferred Tax Asset for $300
B)  credit to Income Taxes Payable for $7, 700
C)  debit to Income Tax Expense for $8, 000
D)  debit to Deferred Tax Liability for $300

Exam 19: Accounting for Income Taxes

Briefly describe the four major differences between IFRS and GAAP in the measurement procedures used in accounting for deferred income taxes.

Correct Answer
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The four differences...
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The amount owed the IRS is recorded in the accounting records in which account?

Correct Answer
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Correct Answer
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FASB Statement No.109 allows the recognition of a deferred tax asset, subject to an asset impairment test.Discuss what criteria a company should employ to determine whether a deferred tax asset is considered impaired.

Correct Answer
verified
A valuation allowance is required (or th...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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In pushing for comprehensive allocation of income taxes, FASB argued that

Correct Answer
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FASB Statement No.109 addressed both interperiod and intraperiod tax allocation issues.Discuss both interperiod and intraperiod tax allocation methods.

Correct Answer
verified
Intraperiod tax allocation allocates inc...
View Answer

Which one of the following statements regarding operating losses is not true?

Correct Answer
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Correct Answer
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When accounting for the current impact of loss carrybacks and carryforwards it is proper to

Correct Answer
verified

All of the following are conclusions reached by the FASB regarding accounting for deferred taxes except

Correct Answer
verified

Exam 19: Accounting for Income Taxes

Briefly describe the four major differences between IFRS and GAAP in the measurement procedures used in accounting for deferred income taxes.

Correct AnswerverifiedThe four differences...View AnswerShow Answer

The amount owed the IRS is recorded in the accounting records in which account?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

FASB Statement No.109 allows the recognition of a deferred tax asset, subject to an asset impairment test.Discuss what criteria a company should employ to determine whether a deferred tax asset is considered impaired.

Correct AnswerverifiedA valuation allowance is required (or th...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In pushing for comprehensive allocation of income taxes, FASB argued that

Correct AnswerverifiedShow Answer

FASB Statement No.109 addressed both interperiod and intraperiod tax allocation issues.Discuss both interperiod and intraperiod tax allocation methods.

Correct AnswerverifiedIntraperiod tax allocation allocates inc...View AnswerShow Answer

Which one of the following statements regarding operating losses is not true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When accounting for the current impact of loss carrybacks and carryforwards it is proper to

Correct AnswerverifiedShow Answer

All of the following are conclusions reached by the FASB regarding accounting for deferred taxes except

Correct AnswerverifiedShow Answer

Correct Answer
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The four differences...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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A valuation allowance is required (or th...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Intraperiod tax allocation allocates inc...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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