How does the Income received from tax free government bonds effect the calculation of deferredtaxes?O It leads to the creation of a Deferred tax Asset.It leads to the creation of a Deferred tax liability.O Is a permanent difference which is disallowed.O Is a temporary difference and is deducted from taxable income.

Tax free government bonds means those bonds which pays interest which is tax free, that is not…

How does the Income received from tax free government bonds effect the calculation of deferred taxes? It leads to the creation of a Deferred tax Asset. O It leads to the creation of a Deferred tax liability. O Is a permanent difference which is disallowed. O Is a temporary difference and is deducted from taxable income.

How does the Income received from tax free government bonds effect the calculation of deferred taxes? It leads to the creation of a Deferred tax Asset. O It leads to the creation of a Deferred tax liability. O Is a permanent difference which is disallowed. O Is a temporary difference and is deducted from taxable income.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 49P

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The definition of gross income in the tax law is: All items specifically listed as income in the tax law All cash payments received for goods provided and services performed All income from whatever source derived All income from whatever source derived unless the income is earned illegally
Can any nonrefundable credits, other than the foreign tax credit, reduce the regular income tax liability below the amount of the TMT? Explain.
1. cont... 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)…
5. How do you call a deductible temporary difference? a. Current tax asset. b. Deferred tax asset. c. Current tax liability. d. Deferred tax liability.
A temporary difference that would result in a deferred tax liability is O Excess of tax depreciation over financial accounting depreciation. O Subscriptions received in advance. O Accrual of warranty expense. O Interest revenue on municipal bonds.
A deductible temporary difference leads to the payment of: Select one: A. less tax in the future and gives rise to a deferred tax asset. B. less tax in the future and gives rise to a deferred tax liability. C. more tax in the future and gives rise to a deferred tax asset. D. more tax in the future and gives rise to a deferred tax liability.
1. A temporary difference arises when an element of income is reported for tax purposes in the period: a. After it is reported in financial income and before it is reported in financial income. b. After that is reported in financial income. c. Before it is reported in financial income. d. It will have no effect on the taxable amounts.
TRUE OR FALSE?If the carrying amount of a liability is higher than the tax base, the difference is a future deductible amount and therefore there is a deferred tax asset.
Where the carrying amount of an asset or liability is different from the tax base a ‘temporary difference’ can arise. Identify the correct statement pertaining to a temporary difference. Select one: a. A temporary difference only occur if the carrying amount of an asset or liability is the same as the tax base b. A temporary difference can never be taxable. c. A temporary difference can never be deductible for tax purposes. d. A temporary difference will result in a decrease (increase) in income tax payable (recoverable) in future periods when the carrying amount of the asset or liability is recovered or settled.
16. Which of the following is NOT correct? a.Tax credits may be refundable or non-refundable. b. Income from capital related transactions is an example of an exempt income for income tax purposes. c.Tax credits are tax previously paid, or an amount used to reduce tax liability if certain conditions are met. d.Tax Relief is income that is not subject to tax.
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)…
Tax losses can be viewed as providing: Answer deductible temporary differences, and therefore deferred tax liabilities b.taxable temporary differences, and therefore a current tax liability c.taxable temporary differences, and therefore a current tax refund d.deductible temporary differences, and therefore a deferred tax asset