Income Taxes II by Edu Pristine

Author of lecture Income Taxes II

Edu Pristine

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... rate changes on a company´s financial statements and ...

... tax rate decreases? A change in the income tax rate requires the DTA and DTL to be adjusted to reflect the new tax rate. Reason is, if earlier a deferred tax liability was created @ 30% for an income not recognized for tax purposes, ...

... the tax rate causes the balance sheet value ...

... correct answer is increase. If tax rates increase, the balance sheet value ...

... in the tax rate at the beginning of the accounting period will: A. Increase taxable income in the current period B. Increase a deferred tax asset C. Reduce a deferred tax ...

... Decrease in tax rate B. Increase in tax rate C. No effect of changes in ...

... Which one of the following statements is most accurate? A. Deferred tax assets and liabilities are adjusted with changes in expected tax rates under the liability method B. Deferred tax asset happens when ...

... tax assets and liabilities are ...

... Distinguish between temporary and permanent differences in ...

... Permanent difference is one which is not expected to reverse in the future. A DTA/DTL is not created for such an item. These items have an impact on the Effective Tax rate Includes: ...

... Effective Tax Rate = Income Tax Expense ...

... the effective tax rate for calculating tax expense should be adjusted. The correct answer is: The effective tax rate for calculating tax expense should be adjusted. ...

... Product warranty costs B. Premiums paid for life insurance policies on ...

... 3. Revenue from installment sales is recognized in the period received for tax purposes and recognized in the period earned for accounting purposes. If these periods are different, this is an example of ...

... A. Warranty Expense B. Accelerated Depreciation ...

... expense and change in depreciation methods are temporary in nature, so cannot cause the difference in effective tax rate and statutory tax rate. Only answer (c) can make ...

... 5. Recognition of an expense that is not permitted under ...

... installment sales method is used. 1. Which of the following is most accurate? A. Permanent differences will result in a deferred tax asset or a liability. B. The effective tax rate ...

... C. Interest revenue received from investments in municipal bonds 2. Which of the following would not result in a permanent difference between pretax financial income and taxable income? ...

... are accounted for in the income statement. Any such adjustment made should be properly reviewed by an analyst… Deferred Tax Items. A company is required to disclose the details of items ...

... Deferred Tax Asset $14,000,000 Deferred Tax Liability $3,000,000 Valuation allowance related to deferred taxes $7,500, 000 - What is the most likely cause of ABCs reporting of Valuation allowance? A. Accounting earnings have been manipulated B. Future profitability is in doubt ...

... The correct answer is Future profitability is in doubt. Valuation allowance occurs when the ...

... reduce the deferred tax liabilities and hence increases the net income. B. Valuation allowances increase the deferred tax liability and hence increases the net income. C. Valuation allowances reduce the deferred tax assets and hence reduce the ...

... The correct answer is Valuation allowances reduce the deferred tax assets and hence reduce the net income. According to US GAAP, if it is likely than not (greater than 50% probability) that some or ...

... will never be realized because of the uncertainty about future profit. Which of the following will be t he most likely change to be recorded on its balance sheet? A. It is likely to create deferred tax liability of $ 15mn to offset this transaction B. It is likely to create a valuation allowance of $ 15mn C. It is likely to reduce deferred tax assets ...

... A valuation allowance serves to reduce the value of defer red ...

... A valuation allowance : A. increases income, reduces assets & equity. B. reduces income, assets & equity. C. reduces income, increases liability ...

... A valuation allowance reduces income, assets & equity. A valuation allowance is used as a contra account against deferred tax assets to reflect the likelihood that defer red tax assets will never be ...