F6 - Accounting for Income Taxes

Question 1

T/F: All current deferred tax liabilities and assets must be offset and presented as one amount

Answer 1

True; they are netted to produce one amount (either an asset or liability)

Question 2

T/F: Current tax expense is calculated using only the current year taxable income (which does not include any temporary differences)

Answer 2

True; current tax expense is calculated by multiplying the current year taxable income by the current year tax rate

Question 3

T/F: Tax expense is reduced by the amount of estimated tax payments made throughout the year

Answer 3

False; the estimates do not affect the reported tax expense