[THEORY] Accounting for Income Tax Flashcards
It is the deferred tax consequence attributable to a
taxable temporary difference.
a. Deferred tax liability
b. Deferred tax asset
c. Current tax liability
d. Current tax asset
Answer: a. Deferred tax liability
It is the deferred tax consequence attributable to a
deductible temporary difference and operating logs carryforward.
a. Deferred tax liability
b. Deferred tax asset
c. Current tax liability
d. Current tax asset
Answer: b. Deferred tax asset
It is the amount of income tax payable in respect of taxable income.
a. Current tax expense
b. Total income tax expense
c. Deferred tax expense
d. Deferred tax benefit
Answer: a. Current tax expense
It is the aggregate amount included in the determination
of net income for the period in respect of current tax and deferred tax.
a. Tax expense
b. Current tax expense
c. Deferred tax expense
d. Deferred tax benefit
Answer: a. Tax expense
The deferred tax expense is equal to
a. Increase in deferred tax asset less increase in deferred tax liability.
b. Increase in deferred tax liability less increase in
deferred tax asset
c. Increase in deferred tax asset.
d. Increase in deferred tax liability.
Answer: b. Increase in deferred tax liability less increase in deferred tax asset
An entity shall offset a deferred tax asset and liability:
a. When the taxes are levied by different taxing authorities.
b. When the entity has no legally enforceable right to offset.
c. When the taxes are levied by the same taxing authority and the entity has a legally enforceable right to offset a current tax asset against a current tax liability.
d. Under all circumstances.
Answer: c. When the taxes are levied by the same taxing authority and the entity has a legal enforceable right to offset a current tax asset against a current tax liability.
Which is correct about deferred tax assets and liabilities?
a Current deferred tax assets are netted against current deferred tax liabilities.
b. All noncurrent deferred tax assets are netted against
noncurrent deferred tax liabilities.
c. Deferred tax assets are never netted against deferred tax liabilities.
d. Deferred tax assets are netted against deferred tax liabilities if they relate to the same tax authority.
Answer: d. Deferred tax assets are netted against deferred tax liabilities if they relate to the same tax authority.
Which statement is incorrect concerning deferred tax?
a. Deferred tax asset and liability shall be discounted.
b. Tax asset and liability shall presented separately from
other assets and liabilities.
c. Deferred tax asset and liability shall be distinguished
from curent tax asset and liability.
d. Deferred tax asset and liability shall be classified as noncurrent.
Answer: a. Deferred tax asset and liability shall be discounted.
All of the following must be disclosed separately, except:
a. The tax bases of major items on which deferred tax has been calculated.
b. The amount of deductible temporary differences for which no deferred tax asset is recognized.
c. The amount of taxable temporary differences associated with investments in subsidiaries and for which no deferred tax liability is recognized.
d. The amount of income tax relating to each component of other comprehensive income.
Answer: a. The tax bases of major items on which deferred tax has been calculated.
Justification for the method of determining periodic deferred tax expense is based on the concept of:
a. Matching periodic expense to periodic revenue
b. Objectivity in the calculation of periodic expense
c. Recognition of assets and liabilities
d. Consistency of tax expense measurements with actual tax planning
c. Recognition of assets and liabilities
Which of the following differences would result in future taxable amounts?
a. Expenses and losses that are deductible after they are recognized in financial income.
b. Revenues and gains that are taxable before they are recognized in financial income.
c. Revenues and gains that are taxable after they are recognized in financial income.
d. Expenses and losses that are deductible before they are recognized in financial income.Which of the following differences would result in future
taxable amount?
Answer: c. Revenues and gains that are taxable after they are recognized in financial income
A temporary difference that would result in a deferred tax liability is:
a. Interest revenue on municipal bonds
b. Accrual of warranty expense
c. Excess tax depreciation over accounting depreciation
d. Subscription received in advance
c. Excess tax depreciation over
A temporary difference which would result in a deferred tax asset is:
a. Tax penalty or surcharge.
b. Dividends received on share investment.
c. Revenue received in advance but recognized for accounting purposes when earned.
d. Depreciation in advance not allowable as a deduction at the time of receipt but deferred for accounting purposes.
Answer: c. Revenue received in advance but recognized for accounting purposes when earned
At the current year-end, an entity had a deferred tax liability that exceeded a deferred tax asset, which is expected to reverse in the next year. Which of the following shall be reported in the current year-end statement of financial position?
a. The excess of the deferred tax liability over the deferred tax asset as a noncurrent liability.
b. The excess of the deferred tax liability over the deferred tax asset as a current liability.
c. The deferred tax liability as a noncurrent liability and the deferred tax asset as a noncurrent asset.
d. The deferred tax liability as a current liability and the deferred tax asset as a current asset.
(??) a. The excess of the deferred tax liability over the deferred tax asset as a noncurrent liability.
Which statement is true regarding deferred tax asset
and liability in the financial statements?
a. Deferred tax asset is always netted against deferred tax liability.
b. Deferred tax asset of one jurisdiction is offset against
deferred tax liability of another jurisdiction in the netting process.
c. Deferred tax asset and liability may only be classified
as noncurrent.
d. Deferred tax asset and liability are classified as current and noncurrent based on expiration date.
c. Deferred tax asset and liability may only be classified
as noncurrent.
