LEARN MORE...

Cpa Questions

Content type

User Generated

Subject

Accounting

Type

Homework

Uploaded By

Vafvqre47

Pages

Showing Page:

1/3

1. When dealing with deferred taxes, which of the following does not need to be disclosed in a

company’s financial statements?

I. The nature and amount of each type of operating loss and tax credit carryforward.

II. The types and amount of existing temporary differences.

III. The types and amounts of existing permanent differences.

I, II, and III

I and II only

III only

I only

2.Because Gene Co. uses different methods to depreciate buildings for financial statement and

income tax purposes, Gene has temporary differences that will reverse during the next year and

reduce taxable income. Deferred income taxes that are based on these temporary differences

should be classified in Gene’s balance sheet as a:

Current liability.

Noncurrent asset.

Current asset.

Noncurrent liability.

3.Truck Co., organized January 7th, 20X5, has pretax accounting income of $720,000 and taxable

income of $950,000 for the year ended December 31, 20X5. The only temporary difference is

accrued product warranty costs that are expected to be paid as follows:

20X6

$150,000

20X7

$70,000

Showing Page:

2/3

20X8

$50,000

20X9

120,000

Truck has never had any operating losses (book or tax) and does not expect any in the future.

There were no temporary differences in prior years. The enacted income tax rates are 30% for

20X5, 25% for 20X6 through 20X9. How should the deferred income tax associated with

accrued product warranty be recorded in Truck’s December 31, 20X5 balance sheet?

$97,500 Asset

$97,500 Liability

$117,000 Asset

$117,000 Liability

4. When accounting for income taxes, a permanent difference occurs in which of the following

scenarios?

A.An item is included in the calculation of net income, but is neither taxable nor deductible.

B.An item is included in the calculation of net income in one year and in taxable income in a

different year.

C.The accrual method of accounting is used.

D.An item is treated identically for financial and for tax purposes.

5. Packer Co.’s 2015 income statement reported $130,000 in income before provisions for income

taxes. To compute the provision for federal income taxes, the following 2015 data are provided:

Showing Page:

3/3

Unformatted Attachment Preview

1. When dealing with deferred taxes, which of the following does not need to be disclosed in a company’s financial statements? I. II. III. The nature and amount of each type of operating loss and tax credit carryforward. The types and amount of existing temporary differences. The types and amounts of existing permanent differences. I, II, and III I and II only III only I only 2.Because Gene Co. uses different methods to depreciate buildings for financial statement and income tax purposes, Gene has temporary differences that will reverse during the next year and reduce taxable income. Deferred income taxes that are based on these temporary differences should be classified in Gene’s balance sheet as a: Current liability. Noncurrent asset. Current asset. Noncurrent liability. 3.Truck Co., organized January 7th, 20X5, has pretax accounting income of $720,000 and taxable income of $9 ...
Purchase document to see full attachment

Tags: CPA acct