QUESTION 5Which one of the following events which occur after the reporting date of a company but before the financial statements are authorisedfor issue are classified as adjusting event in accordance with HKAS 10 'Events after the Reporting Period'?O 1. A change in tax rate announced after the reporting date, but affecting the current tax liability.2. The determination of the sale proceeds of an item of plant sold after the year end.3. The destruction of a factory by fire.4. The discovery of fraud which had occurred during the year.5. None of them.

According to HKAS 10, following are the objectives of this standard:1. Adjustment of events that…

QUESTION 5 Which one of the following events which occur after the reporting date of a company but before the financial statements are authorised for issue are classified as adjusting event in accordance with HKAS 10 'Events after the Reporting Period'? Ⓒ 1. A change in tax rate announced after the reporting date, but affecting the current tax liability. 2. The determination of the sale proceeds of an item of plant sold after the year end. 3. The destruction of a factory by fire. 4. The discovery of fraud which had occurred during the year. 5. None of them.

QUESTION 5 Which one of the following events which occur after the reporting date of a company but before the financial statements are authorised for issue are classified as adjusting event in accordance with HKAS 10 'Events after the Reporting Period'? Ⓒ 1. A change in tax rate announced after the reporting date, but affecting the current tax liability. 2. The determination of the sale proceeds of an item of plant sold after the year end. 3. The destruction of a factory by fire. 4. The discovery of fraud which had occurred during the year. 5. None of them.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 36RSCQ

See similar textbooks

Similar questions

Question 1 What is the main principle of tax-effect accounting as outlined in AASB 112/IAS 12? Answer: XX Question 2 How are the current and future tax consequences of transactions accounted for? Answer: XX Question 3 What is an ‘exempt income’ and how does it affect the calculation or recovery of carry‐forward tax losses? Answer: XX Question 4 Calculation of Current Tax Liability (CTL) SydMel Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the entity prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available. Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2021 Gross Profit $510,000 Salaries expenses (210,000) Rent expense (52,000) Long service leave expenses (50,000) Depreciation expense - Plant (30,000) Bad debt expense (19,000)…
#52 Which of the following disclosures is required for a change from LIFO to FIFO? Question 52 options: a The cumulative effect on prior years, net of tax, in the current retained earnings statement b Restated prior year income statements c The justification for the change d All of these are required.
Performing Accounting Research When a company is uncertain as to the disposition of a tax position, it becomes a question as to the amount of tax benefit to recognize in the financial statements. Resolution of tax positions may take years. A company is trying to determine how to estimate the benefit to recognize related to an anticipated tax settlement with a taxing authority. What guidance is available in the Codification in reporting this information? FASB ASC 0 0 Check X x 0
PROBLEM 8 - AUDITING PROBLEMCompute the following:1. The corrected pre-tax profit for 20212. What is the net effect of the foregoing errors on the total assets at December 31, 2021? 3. What is the total understatement of the total liabilities at December 31, 2021?
Intermediate Accounting ll ch 16 6. The information that follows pertains to Richards Refrigeration, Incorporated: At December 31, 2024, temporary differences existed between the financial statement book values and the tax bases of the following: ($ in millions) Book Value Tax Basis Future Taxable (Deductible) Amount Buildings and equipment (net of accumulated depreciation) $ 120 $ 90 $ 30 Prepaid insurance 50 0 50 Liability-Loss contingency 25 0 (25) No temporary differences existed at the beginning of 2024. Pretax accounting income was $200 million and taxable income was $145 million for the year ended December 31, 2024. The tax rate is 25%. Required: Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2024. What is the 2024 net income? General Journal Record 2024 income taxes Transaction General Journal Debit Credit 1
Q.1.1 The government announced a change to the tax law which will have a significanteffect on the value of current tax expense that the company will pay in future years. For each of the events described above, discuss whether an adjusting or non‐adjusting eventoccurred. In order to get the mark allocated you will need to justify why you believe the event is either an adjusting or non‐adjusting event.Where the events are adjusting, describe the adjustment that must be made as well as theamount and where the events are non‐adjusting, discuss whether any disclosure needs to bemade in the notes to the financial statements. Justify your answers.
CASE IV JKL Company provided the following information to its accountant to determine the tax due for the current year 2021 as well as any tax consequences of items that cause difference between financial and taxable income: Accounting income before tax, P15,600,000 Accounting Depreciation, P500,000 Litigation loss accrued during the year, P80,000, taxable only when paid. Tax depreciation, P1,500,000 Accrued liability on employees’ health care P250,000 Development cost of computer software, P3,000,000. The computer software is expected to be useful for 3 years starting this year. Nondeductible expenses, P1,250,000 Nontaxable revenue, P2,100,000 Revenue subject to 20% tax rate, P750,000 Bad debts expense for the period, P75,000 Bad debts written off during the year, P45,000 Gross income of installment sales of P450,000 (taxable when collected expected on 2022) The tax rate applicable for this year onwards is 30%. QUESTION: 1. Compute the taxable income
15-Which one of the following represents the provisional tax return? a. Tax return prepared on the basis of the information available at the date of preparation. b. Tax return submitted within six months of the end of the tax year c. None the options d. Tax return submitted within five months of the end of the tax year
CASE IV JKL Company provided the following information to its accountant to determine the tax due for the current year 2021 as well as any tax consequences of items that cause difference between financial and taxable income: Accounting income before tax, P15,600,000 Accounting Depreciation, P500,000 Litigation loss accrued during the year, P80,000, taxable only when paid. Tax depreciation, P1,500,000 Accrued liability on employees’ health care P250,000 Development cost of computer software, P3,000,000. The computer software is expected to be useful for 3 years starting this year. Nondeductible expenses, P1,250,000 Nontaxable revenue, P2,100,000 Revenue subject to 20% tax rate, P750,000 Bad debts expense for the period, P75,000 Bad debts written off during the year, P45,000 Gross income of installment sales of P450,000 (taxable when collected expected on 2022) The tax rate applicable for this year onwards is 30%. QUESTION: 7. Net income for the year is?
Under IFRS when a change in the tax rates is enacted I. Companies should record its effect on existing deferred tax accounts immediately. II. Companies report the effect of changes in tax rates on deferred tax accounts in the period the new rate becomes effective. III. Companies report the effect of changes in tax rates on deferred tax accounts that arise in future periods when the new tax rates are in effect. Select one: a. Either I, II, or III, depending on how frequently tax rates change in the company’s tax jurisdiction b. II Only c. I Only d. III Only
Intermediate Accounting ll ch. 16 4. Alvis Corporation reports pretax accounting income of $400,000, but due to a single temporary difference, taxable income is only $250,000. At the beginning of the year, no temporary differences existed. Required: Assuming a tax rate of 25%, what will be Alvis’s net income? What will Alvis report in the balance sheet pertaining to income taxes?
4 When should a company create a valuation allowance for a deferred tax asset? O When taxable income is greater than reported income O When there is less than a 50% probability that a company will fail to realize a portion of the asset O When there is more than a 50% probability that a company will fail to realize a portion of the asset O When reported income is greater than taxable income W