If a company depreciates a five-year asset using the straight-line method for books and double declining balance for tax, it will create a _____________ if it regularly replaces the assets after two years. a) Current tax payable b) Current tax liability c) Deferred tax asset d) Deferred tax liability

If a company depreciates a five-year asset using the straight-line method for books and double declining balance for tax, it will create a _____________ if it regularly replaces the assets after two years. a) Current tax payable b) Current tax liability c) Deferred tax asset d) Deferred tax liability

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 11MCQ

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Due to differences between depreciation reported in the income statement and depreciation deducted for tax purposes, Lucas Corp. has $2 million in temporary differences that will increase taxable income next year. Assuming that Lucas has no other temporary differences, deferred income taxes should be reported in this year's ending balance sheet as a______?
Due to differences between depreciation reported in the income statement and depreciation deducted for tax purposes, Lucas Corp. has $2 million in temporary differences that will increase taxable Income next year. Assuming that Lucas has no other temporary differences, deferred income taxes should be reported in this year's ending balance sheet as a: Multiple Choice Current deferred asset. Noncurrent deferred tax asset. Current deferred tax liability. Noncurrent deferred tax Iliability. Finacial Acco..pages student-s-reque...pdf Finacial-Accoun...pdf Finacial Acco...pages -pdf Removed
Statement 1: Permanent differences result in deferred tax assets and deferred tax liabilities. Statement 2: Deferred tax assets should be reported as current if these will reverse in the next twelve months. Statement 3: If the carrying amount of an asset is higher than the tax base, the difference will result in deferred tax liability. Statement 4: Operating loss carryforward occurs when an entity has a negative taxable income. Statement 5: Rent collected in advance shall be taxable when earned. Which of the statement/s are false?
A company incurs a capital expenditure that may be amortized over fi ve years for accounting purposes, but over four years for tax purposes. Th e company will most likelyrecord:A . a deferred tax asset.B . a deferred tax liability.C . no deferred tax asset or liability.
Parker Company identifies depreciation as the only difference for future taxable amounts. In Year 1, its depreciation for financial reporting purposes is $9,000 and $10,500 for income tax reporting purposes. Parker has an income tax rate of 35%. Assume that Parker’s taxable income for Year 1 is $150,000. Required: Prepare the journal entry to record Parker’s income tax expense.
Which of the following statements related to loss carryback is NOT correct? O The company may carry the net operating loss back two years and receive refunds for income taxes paid in those years. O The company may carry the net operating loss back three years and receive refunds for income taxes paid in those years. O The company may carry forward any loss remaining after the two-year carryback to offset future taxable income. O The company must apply the loss to the earlier year first and then to the second year.
A company acquired a new machine and immediately deducted the entire cost on its current income tax return because of favorable tax depreciation rules. The company uses straight-line depreciation for financial statement purposes. Which outcome will result from this decision? O A decrease in taxes payable in future years as a result of temporary differences O An increase in taxes payable in future years as a result of temporary differences A decrease in taxes saved in future years as a result of permanent differences O An increase in taxes saved in future years as a result of permanent differences
Loss is generally considered a tax relief and can be carried forward to the following trading year and offset against the profit for that year. A company operating in Country A with the following tax loss rules. i. There is no cap on the number of years for which losses may be carried forward. ii. There is no cap is applicable for the first five years of assessment next following the year of assessment in which the taxpayers started a trade, business, or profession. iii. There is no cap available where a taxpayer (whether individual or company) whose gross turnover is below $10,000,000 per annum. iv. The deduction allowed for prior year losses (PYL) is 50 percent of the net income for the respective year. In 2022, ABC Limited, a company registered in Country A, had a trading profit of $3,000,000. The company started business in 1997 and its gross revenue was $15,000,000 for the tax year. Prior year tax losses are $4,000,000. It’s loss relief for that year is. a. $1,500,000…
Sure Ako Corporation reported pretax income of P4,500,000 for the year ended December 31, 2022. The controller is unfamiliar with required treatment of temporary and permanent differences in reconciling taxable income to pretax financial income and has contacted you for an advice. The company record shows the following differences: Tax depreciation in excess of book depreciation P550,000 Proceeds from life insurance policy upon death of an officer* 250,000 Interest revenue on bank deposits 196,000 *The beneficiary of the insurance policy is Sure Ako Corporation. Tax rate is 30% in 2022 and in the future. Payments in previous quarters totaled P450,000. How much is the total income tax expense for the year 2022?
A deferred tax asset would result if a. a company recorded more taxable depreciation in 2019 for an asset acquired in 2011. b. a company recorded more warranty expense in 2019 than cash paid in 2019 for warranty repairs. c. a company recorded more interest revenue in 2019 than cash received in 2019 for interest. Od. a company recorded a tax penalty in 2019 that it paid in 2020.
For the events described below, select the taxrelated term from the following list that best applies: gross income, depreciation, operating expense, taxable income, income tax, or net operating profit after taxes. (a) A corporation reports that it had a negative $1,750,000 net profit on its annual income statement. (b) An asset with a current book value of $120,000 was utilized on a new processing line to increase sales by $200,000 this year. (c) A machine has an annual write-off of $21,000. (d ) The cost to maintain quality assurance equipment during the past year was $75,000. (e) A supermarket collected $24,000 in lottery ticket sales last year. Based on the winnings paid to individuals holding these tickets, a rebate of $250 was sent to the store manager. ( f ) An asset with a book value of $8000 was retired and sold for $8450. (g) The cost of goods sold in the past year was $3,680,200. (h) An over-the-counter software system will generate $420,000 in revenue this quarter
A company experiences a net operating loss of $80,000 in year 1. In year 2, the company reports taxable income of $60,000. How much of the taxable income will the company offset in year 2 by applying the net operating loss from year 1? O $60,000 O $48,000 O $80,000 O Cannot be determined because the tax rate is not given.