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Unformatted text preview: ch17 Student: ___________________________________________________________________________ 1. ASC 740 governs how a company accounts for all taxes it incurs. True False 2. ASC 740 is the sole source of rules related to accounting for income taxes. True False 3. Temporary differences create either a deferred tax asset or a deferred tax liability. True False 4. Publicly-traded companies usually file their financial statements before they file their federal income tax returns. True False 5. The Emerging Issues Task Force assists the FASB by providing guidance on the implementation of ASC 740 and other accounting pronouncements. True False 6. ASC 740 applies to the accounting for state and local and international income taxes as well as federal income taxes. True False 7. The "current income tax expense or benefit" always represents the taxes paid or refunded in the current year. True False 8. The focus of ASC 740 is the income statement. True False 9. Tax-exempt interest from municipal bonds is an example of a permanent difference. True False 10. The tax effects of permanent differences always show up in a company's computation of its effective tax rate. True False 11. In general, a temporary difference reflects a difference in the financial basis and tax basis of an asset or liability on the balance sheet. True False 12. Temporary differences that are cumulatively "favorable" are defined as taxable temporary differences . True False 13. Brown Corporation reports $100,000 of gain from the sale of land on its income statement. For tax purposes, Brown uses the installment method and reports gain of $10,000. The $90,000 difference in the gain reported is a deductible temporary difference. True False 14. Congress reduces the corporate tax rate from 35 percent to 25 percent effective in 2012. The tax rate change will affect only deferred tax assets and liabilities that arise in 2012 and thereafter. True False 15. A valuation allowance can reduce both a deferred tax asset and a deferred tax liability. True False 16. A corporation evaluates the need for a valuation allowance by comparing both positive and negative evidence that the corporation will realize a deferred tax asset in the future. True False 17. A corporation undertakes a valuation allowance analysis to determine if a deferred tax asset should be recognized on the balance sheet. True False 18. Three consecutive years of financial accounting (book) losses likely would be considered negative evidence in a valuation allowance analysis. True False 19. ASC 740 deals with accounting for uncertain tax positions . True False 20. ASC 740 applies a two-step process in determining if an uncertain tax benefit should be recognized....
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This note was uploaded on 02/28/2012 for the course ACCOUNTING 401 taught by Professor Johnson during the Spring '12 term at Regis University.

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ch17 - ch17 Student:

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