Quiz Ch. 19

Quiz Ch. 19 - 1. Recognizing a valuation allowance for a...

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1. Recognizing a valuation allowance for a deferred tax asset requires that a company A. consider all positive and negative information in determining the need for a valuation allowance. B. consider only the positive information in determining the need for a valuation allowance. C. pass a recognition threshold, after assuming that it will be audited by taxing authorities. D. take an aggressive approach in its tax planning. 2. A major distinction between temporary and permanent differences is A. permanent differences are not representative of acceptable accounting practice. B. temporary differences occur frequently, whereas permanent differences occur only once. C. once an item is determined to be a temporary difference, it maintains that status; however, a permanent difference can change in status with the passage of time. D. temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse. 3. Lyons Company deducts insurance expense of $105,000 for tax purposes in 2012, but the expense is not yet recognized for accounting purposes. In 2013, 2014, and 2015, no insurance expense will be deducted for tax purposes, but $35,000 of insurance expense will be reported for accounting purposes in each of these years. Lyons Company has a tax rate of 40% and income
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This note was uploaded on 01/16/2012 for the course BUS 312 taught by Professor Account during the Spring '11 term at IUPUI.

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Quiz Ch. 19 - 1. Recognizing a valuation allowance for a...

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