Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 5, Problem 1BCC
1.
To determine
To identify: The requirements related to the presentation of the gross amounts, the net of tax amounts and the tax impact of items included in other comprehensive income.
2.
To determine
To identify: Whether the respondents to the exposure draft agree with this approach and whether any respondents disagree and their concerns.
3.
To determine
To identify: The reason for the board’s decision.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
ACCOUNTING FOR INCOME TAXPART A1) Explain the difference between the ‘tax payable’ and ‘tax effect’ methods of accounting for income tax2) Discuss the ‘balance sheet’ approach to accounting for income tax required bty Accounting Standard AASB112 Income Taxes, comparing it to the ‘income statement’ approach adopted under the previous accounting standard.3) Do you think small companies should have to adopt tax effect accounting as required by Accounting Standard AASB 112 Income Taxes? Provide reasons.PART BCASE STUDYBarnacle Ltd commenced operation on 1 July 2009 and prepared its first financial statements for the year ended 30 June 2010. The following information has been provided for the year ended 30 June 2011Profit before tax for the year ended 30 June 2011 was calculated as follows:Gross Profit $ 1380,000Add:Rental Revenue 12,000Less:ExpensesLong Service Leave 10,000Depreciation Plant and Equipment 135,000Salaries and Wages 111,000Warranty Claims 36,000Amortisation of Research and…
The assumption made for the tax effect method of accounting for a company’s income tax is:
Select one:
A. an accounting balance sheet and a tax balance sheet are the same.
B. income tax expense is equal to income tax payable.
C. income tax expense is not equal to current tax liability.
D. a tax balance sheet is prepared according to accounting standards.
Definitions
The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions.
Code Letter
Term
Code Letter
Term
A.
Future deductible amount
H
Deferred tax consequences
B
Income tax payable (or refund)
I
Future taxable amount
Operating loss carryback
Deferred tax liability
D
Valuation allowance
K
Temporary difference
E
Deferred tax asset
Income tax expense (or benefit)
F
Operating loss carryforward
M
Deferred tax expense (or benefit)
Taxable income
Required:
Indicate which term belongs with each definition by choosing the correct term.
1. The deferred tax consequences of future deductible amounts and operating loss carryforwards
2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or
settled, respectively
X
3. Temporary…
Chapter 5 Solutions
Intermediate Accounting
Ch. 5 - What are the three limitations of the income...Ch. 5 - In what way is the income statement useful for...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - What management behavior does the term earnings...Ch. 5 - What is the difference between permanent and...Ch. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - What are the six key items to be reported on the...Ch. 5 - Explain why operating income is an important...Ch. 5 - Prob. 5.13QCh. 5 - Prob. 5.14QCh. 5 - What items are included in net income?Ch. 5 - Are items of other comprehensive income included...Ch. 5 - What two choices must companies make when...Ch. 5 - Prob. 5.18QCh. 5 - Prob. 5.19QCh. 5 - Are companies reporting under U.S. GAAP required...Ch. 5 - What accounts are summarized on the statement of...Ch. 5 - What is financial statement analysis?Ch. 5 - Prob. 5.23QCh. 5 - What are comparative financial statements and why...Ch. 5 - What is the difference between vertical and...Ch. 5 - Prob. 5.26QCh. 5 - Explain the difference between return on equity...Ch. 5 - How is a companys profit margin calculated?Ch. 5 - Prob. 5.1MCCh. 5 - Moore Furniture Inc., a public company, has...Ch. 5 - Beach and Poole, CPA is reviewing income statement...Ch. 5 - Prob. 5.4MCCh. 5 - Allison Corporations current year income from...Ch. 5 - Prob. 5.6MCCh. 5 - Chili Co. had the following balances at December...Ch. 5 - Szuba Corporation reported the following...Ch. 5 - Prob. 5.9MCCh. 5 - Prob. 5.1BECh. 5 - Prob. 5.2BECh. 5 - Advantages and Disadvantages of the Income...Ch. 5 - Identify each of the earnings items as primarily...Ch. 5 - Income Statement Presentation. Place the...Ch. 5 - Statement of Net Income Presentation, IFRS. Which...Ch. 5 - Single-Step Statement of Net Income. Carr...Ch. 5 - Statement of Net Income, IFRS. Using the...Ch. 5 - Multiple-Step Statement of Net Income. Using the...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Prob. 5.11BECh. 5 - Prob. 5.12BECh. 5 - Prob. 5.13BECh. 5 - Prob. 5.14BECh. 5 - Computation of Retained Earnings. Taxi Cabs, Inc...Ch. 5 - Computation of Contributed Capital. Using the...Ch. 5 - Prob. 5.17BECh. 5 - Prob. 5.18BECh. 5 - Prob. 5.19BECh. 5 - Ratio Analyses. Green Grasshopper Incorporated is...Ch. 5 - Multiple-Step and Single-Step Statements of Net...Ch. 5 - Condensed Statement of Net Income. Using the trial...Ch. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Multiple-step Statement of Net Income. The current...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Multiple-step income Statement. Ciara s Cookie...Ch. 5 - Prob. 5.8ECh. 5 - Prepare Statement of Stockholders' Equity. Dane...Ch. 5 - Prepare Statement of Stockholders Equity. Ciaras...Ch. 5 - Prepare a Statement of Stockholders' Equity....Ch. 5 - Prob. 5.12ECh. 5 - Multiple-Step and Single-Step income Statement,...Ch. 5 - Condensed Income Statement. Using the information...Ch. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Net Income Presentation. IFRS....Ch. 5 - Income Statement Presentation, Classification, and...Ch. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Comprehensive Income Single-and...Ch. 5 - Prepare Statement of Stockholders Equity. Use the...Ch. 5 - Prob. 5.9PCh. 5 - Prob. 1JCCh. 5 - Prob. 1FSACCh. 5 - Prob. 2FSACCh. 5 - Prob. 1SSCCh. 5 - Surfing the Standards Case 2: Amounts Paid by...Ch. 5 - Prob. 1BCCCh. 5 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- LO.3, 4, 5 Contrast the income taxation of individuals and C corporations as to: a. Alternative minimum tax. b. Dividend income. c. Qualified business income deduction of 20 percent. d. Use of the cash method of accounting. e. Accounting period used for tax purposes. f. Applicable tax rates. g. Due date of the tax return.arrow_forwardThe 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 illegallyarrow_forward1. The amount of income taxes that relate to financial income subject to tax is reported on the income statement as A. long-term deferred income taxes (credit) C. income tax expense B. current deferred income taxes (debit) D. income tax payable 2. An item that would create a permanent difference in pretax financial and taxable income would be A. using accelerated depreciation for tax purposes & straight line depreciation for book purposes. B. using the percentage of completion method on long-term construction contracts. C. purchasing equipment previously leased with an operating lease in prior years. D. paying fines for violation of laws. 3. Which of the following is the most likely item to result in a deferred tax asset? A. using completed contract method of recognizing construction revenue tax purposes, but using percentage of completion method for financial reporting purposes. B. using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes.…arrow_forward
- 1. Which statement is true about intraperiod tax allocation? a. It arises because certain revenue and expense items appear in the income statement either before or after they are included in the tax return b. It is required for the cumulative effect of accounting changes but not for prick period adjustments c. The purpose is to allocate income tax expense evenly over a number of accounting periods d. The purpose is to relate the income tax expense to the items which affect the amount of tax 2. Which temporary difference would result in a deferred tax asset? a. Tax penalty or surcharge b. Dividend received on share investment c. Excess tax depreciation over accounting depreciation d. Rent received in advance included in taxable income but deferred for financial accounting 3. Which temporary difference would result in a deferred tax liability? a. Interest revenue on municipal bonds b. Accrual of warranty expense c. Excess tax depreciation over…arrow_forwardIncome tax expense reported on a company’s income statement equals taxes payable, plusthe net increase in:A . deferred tax assets and deferred tax liabilities.B . deferred tax assets, less the net increase in deferred tax liabilities.C . deferred tax liabilities, less the net increase in deferred tax assets.arrow_forward1. Which of the following statements is incorrect regarding deferred taxes? a. Income tax payable plus or minus the change in deferred income taxes equals total income tax expense. b. The deferred portion of income tax expense is the amount of change in deferred taxes related to the current period. c. In computing income tax expense, a company deducts an increase in a deferred tax liability to income tax payable. d. All of the choices are incorrect. 2. A liability in 2021 is reported for financial reporting purposes but not for tax purposes. When this liability is settled in 2022, a future taxable amount will: a. pretax financial income will exceed taxable income in 2022. b. the Company will record a decrease in a deferred tax liability in 2022. c. total income tax expense for 2022 will exceed current tax expense for 2022. d. will not be affected. 3. Assuming a 35% statutory tax rate applies to all years involved, which of the following situations will give rise to reporting a…arrow_forward
- Unless a company has a legal right of set-off, IAS 12 Income Taxes, requires disclosure of all of the following information for deferred tax in the statement of financial position: I The amount of deferred tax assets recognised II The amount of the deferred tax liabilities recognised III The net amount of the deferred tax assets and liabilities recognised IV The amount of the deferred tax asset relating to tax losses a. I, II and III only b. III and IV only c. I, II and IV only d. IV onlyarrow_forwardWhen income tax expense differs from income taxes currently payable on taxable income companies recognize deferred tax assets and deferred tax liabilities. What type of event would create a deferred tax asset and deferred tax liability? Please provide numerical examples. Discuss the two principal reasons income before taxes for financial reporting differs from taxable income. Please provide an argument over the life of the assets deferred liabilities and deferred assets cancel each other out. Use minimum two in text citation that must match peer reviewed referencesarrow_forwardAccounting profit is O A. The The profit or loss is for a period determined before deducting in accordance tax expense O B. The profit or loss is for a period determined in accordance with tax law C. The profit or loss after for a period after deducting tax expense O D. The profit or loss after current tax expense determined accordance with tax lawarrow_forward
- analyze disclosures relating to deferred tax items and the eff ective tax rate reconciliation,and explain how information included in these disclosures aff ects a company’s fi nancialstatements and fi nancial ratios;arrow_forward28arrow_forwardA reduction in the statutory tax rate would most likely benefi t the company’s:A . income statement and balance sheet.B . income statement but not the balance sheet.C . balance sheet but not the income statement.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Understanding U.S. Taxes; Author: Bechtel International Center/Stanford University;https://www.youtube.com/watch?v=QFrw0y08Oto;License: Standard Youtube License