Answered: IV. Operating loss carrybacks Select…

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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1. Under IFRS companies are required to provide a reconciliation between actual tax expense and the applicable tax rate. The purpose(s) of this reconciliation include

I. Making better prediction of future cash flow.

II. Predicating future cash flows for operating loss carryforwards.

III. Assessing the composition of the net deferred income tax liability.

IV. Assessing quality of earnings.

Select one:

a.I, II, III and IV.

b.I, III, and IV only.

c.I, II and IV only.

d.I and IV only.

2. Under IFRS deferred tax assets are recognized for

I. Deductible temporary differences.

II. Deductible permanent differences.

III. Operating loss carryforwards.

IV. Operating loss carrybacks

Select one:

a.I and III only.

b.I and IV only.

c.II and III only.

d.I, II, and III.

3. In determining whether to adjust a deferred tax asset, a company should

Select one:

a.pass a recognition threshold, after assuming that it will be audited by taxing authorities.

b.take an aggressive approach in its tax planning.

c.consider only the positive information in determining the need for an adjustment.

d.consider all positive and negative information in determining the need for an adjustment.

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