The entry to recognize that a portion of a deferred tax asset would more likely than not be not utilized would include which of the following line items? (' 71 O A credit to deferred tax asset O A credit to income tax expense O A credit to a valuation account O A credit to deferred tax liability
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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 illegallyWhich option is the correct definition of tax base? Select one: a. Tax base is the amount the asset or liability is recorded at in the accounting records. b. Tax base is a comparing the balance sheet derived using accounting rules with balance sheet that would be derived from taxation rules c. Tax base is the recognition of assets and liabilities in the balance sheet based on the differences between accounting and tax values of assets and liabilities. d. Tax base is defined as the amount that is attributed to an asset or liability for tax purposes.Indicate the type of Deferred Tax account created by Prepaid Expenses and Accrued Revenues, respectively. Select one: O a Asset Asset Ob. Liability, Liability Oc Asset, Liability O d. Liability, ASset
- Question 1: Why do deferred tax assets or deferred tax liabilities arise? Explain your answer with a suitable example. Question 2: Will the existence of unused tax losses always lead to the recognition of deferred tax assets? Explain your answer with suitable example. Question 3: Do the liabilities and assets that are generated by using the 'balance sheet method' of accounting for tax appear to be consistent with the definition and recognition criteria of assets and liabilities promulgated within the Conceptual Framework? Question 4: Under what conditions can deferred tax assets be offset against deferred tax liabilities? Question 5: Critically examine the disclosures made by an Australian Securities Exchange (ASX) listed company in its latest financial statements and associated notes regarding income tax issues. While every company will have unique tax matters and position, your discussion should highlight the following: Identify the income tax expense (income) shown in…Access the glossary (“Master Glossary”) to answer the following. a. What is a deferred tax asset? b. What is taxable income? c. What is the definition of valuation allowance? d. What is a deferred tax liability?A purpose of an adjustment to income is to (option: a.reduce gross income? b. help determine gross income? c. reduce tax owed after tax has been determined?). Another purpose of an adjustment to income is to (option: a. help determine adjusted gross income? b. calculate taxable income after agi has been determined? c. be subtracted after agi to help determine taxable income?)
- Which of the following is an example of a temporary difference which would result in a deferred tax asset? a. Rent revenue collected in advance included in taxable income before it is included in accounting income b. Investment gains recognized earlier for accounting purposes than for tax purposes c. Use of straight-line method for accounting purposes and an accelerated rate for tax purposes d. Use of a longer depreciation period for accounting purposes than is used for tax purposeFor 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 differerence Use the appropriate number to indicate your answer for each. A. For some assets, straight-line depreciation is used for tax purposes while double-declining balance method is used for financial reporting purposes. B. Warranty expenses are accrued when the sale is made, but cannot be deducted until the work is actually C. The company uses the percentage of completion method to record revenue on long-term contracts for financial reporting purposes, but the completed contract method is used for tax purposes. D. Accelerated depreciation is used for tax purposes, and the straight-line depreciation method is used for financial…Which of the following statements is / are correct?1. Some tax credits are refundable.2. Some tax credits are nonrefundable.a. 1 only.b. 2 only.c. Both 1 and 2.d. Neither 1 nor 2.
- A deferred tax liability or asset that is related to an asset or liability shall be classified in the statement of financial position based on the expected reversal date of the temporary difference. a. TRUE b. FALSEThe basic issue in deciding whether to record a valuation allowance for a deferred tax asset is determining whether it is more likely than not if future taxable income will be sufficient to realize the tax benefit. True or False True FalseWhich of the following results to a deferred tax liability? When the carrying amount of an asset is lower than its tax base When the carrying amount of a liability is higher than its tax base When the accounting income is higher than taxable income because of a permanent difference All of the choices None of the choices