Deck 16 Flashcards Preview

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Flashcards in Deck 16 Deck (21):

Journal entry to record prior service cost and pension losses:

Dr. OCI and Cr. Pension benefit asset/liability.....Separate entry: Dr. DTA and Cr. Deferred Tax benefit - OCI


Journal entry to record amortization to pension expense (losses):

Dr. Net periodic pension cost and Cr. OCI.....Separate entry: Dr. Deferred tax benefit - OCI and Cr. Deferred tax benefit - I/S


Journal entry to record pension gains:

Dr. Pension Benefit asset/liability and Cr. OCI.....Dr. Deferred tax expense - OCI and Cr. Deferred tax liability


Journal entry to record amortization to pension expense (gain):

Dr. OCI and Cr. net periodic pension cost......Dr. Deferred tax expense - I/S and Cr. Deferred tax expense - OCI


Attribution period:

Generally begins at the employee's date of hire and ending at the full eligibility date


Employee's compensation for future absences (vacation) should be accrued if these 4 conditions are met:

1. Services have already been rendered; 2. obligation relates to vested or accumulated rights; 3. amount can be reasonably estimated; and 4. payment is probable


Deferred compensation expense is taken over what period?

Taken over the required period of service


Gain/loss on extinguishment is equal to:

The difference between the reacquisition price and the carrying amount


In an exchange that lacks commercial substance, record the asset received as:

The NBV of the asset surrendered minus any boot received plus any cash paid


Deferred income tax expense =

Current period temporary differences times the enacted future tax rate


What would cause an increase in deferred income tax liabilities?

Increase in rent receivable and prepaid insurance


When is a deferred tax liability reported?

When income is recognized in the financial statement before it is reported as taxable income


Examples of permanent differences:

Premium on an officer's life insurance, interest received on municipal bonds, tax-exempt interest revenue (Do not affect deferred income tax liability)


The reversal of current temporary differences will result in (taxable or deductible amounts?):

Deductible amounts


Temporary differences that decrease future taxable income results in a (DTL of DTA)?

Deferred tax asset which will be reported as noncurrent


Effective tax rate =

income tax expense divided by pretax income


What should be disclosed related to deferred taxes?

Temporary differences and Operating losses and tax credit carry forward (No permanent differences since they do not relate to deferred taxes)


Valuation allowances are only applicable to:

Deferred tax assets


Total income tax expense =

Current income tax expense plus/minus deferred income tax expense


Deferred Tax Liability

Future Taxable income > Future financial income (Tax deductible first/ F/S expense later)


Deferred Tax Asset

Future Taxable income