CHAP016 - Chapter 16 Accounting for Income Taxes True/False...

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Chapter 16 Accounting for Income Taxes True/False Questions 1. A temporary difference originates in one period and reverses, or turns around, in one or more later periods. Answer: True Learning Objective: 1 Level of Learning: 1 2. A deferred tax asset represents the tax effect of the temporary difference between the financial carrying value of an asset or liability and its tax basis. Answer: True Learning Objective: 2 Level of Learning: 1 3. Revenues from installment sales of property reported on financial statements in prior years and currently reported on the tax return create deferred tax assets. Answer: False Learning Objective: 2 Level of Learning: 1 4. Expenditures currently deducted on the tax return but not included with expenses on the income statement until subsequent years create deferred tax liabilities. Answer: True Learning Objective: 1 Level of Learning: 1 5. Future taxable amounts result in deferred tax assets. Answer: False Learning Objective: 2 Level of Learning: 1 6. The basic issue in deciding whether to record a valuation allowance for a deferred tax asset is if probable taxable income is anticipated to be insufficient to realize the tax benefit. Answer: True Learning Objective: 3 Level of Learning: 1 7. Changes in enacted tax rates that do not become effective in the current period affect deferred tax accounts only after the new rates take effect. Answer: False Learning Objective: 5 Level of Learning: 1 8. A net operating loss (NOL) carryforward creates a deferred tax liability that should be classified as current to the extent that the NOL will be recovered in the following year. Answer: False Learning Objective: 7 Level of Learning: 1 9. The tax benefit of a net operating loss carried back two years represents a current receivable for income tax to be refunded. Answer: True Learning Objective: 7 Level of Learning: 2 10. The classification of deferred tax assets is sometimes dependent on when the benefit will be realized. Answer: True Learning Objective: 2 Level of Learning: 2 Spiceland/Sepe/Tomassini, Intermediate Accounting, Fourth Edition 133
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Chapter 16 Accounting for Income Taxes Matching Pair Questions Use the following to answer questions 11-15: 11-15. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term by placing the letter designating the best term in the space provided by the phrase. Terms: A. Deferred tax asset B. Deferred tax liability C. Interperiod tax allocation D. Intraperiod tax allocation E. Operating loss carryback F. Operating loss carryforward G. Permanent difference H. Prior period adjustment I. Taxable income J. Valuation allowance Sentences: 11. ___ Will generate a refund of taxes paid in prior years.
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CHAP016 - Chapter 16 Accounting for Income Taxes True/False...

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