Defered Taxes

Question 1

Deferred income tax expense

Answer 1

is equal to the change in the net deferred tax asset or liability from the beginning of the period to the end of the period.

increase or decrease in the net deferred tax asset or deferred tax liability from the beginning of the period to the end of the period

Question 2

equity in earnings

Answer 2

is recognized on the income statement but not on the tax return, while dividends received are not recognized on the income statement but must be recognized on the tax return

Question 3

deferred tax asset

Answer 3

results from a liability with a carrying amount that is greater than its tax basis or an asset with a carrying amount that is lower than its tax basis

When an expense is recognized in the current period’s income, resulting in the recognition of a liability for financial statements that is not yet recognized for tax, this results in a deferred tax asset.

future taxable income < future book income

Question 4

deferred tax liability

Answer 4

If expenses are deductible in the current year’s tax return but nor reported in income, the financial statement liability will be lower than the tax liability, resulting in a deferred tax liability.

future taxable income > future book income

Question 5

Permanent difference

Answer 5

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

Question 6

current portion of income tax expense

Answer 6

the amount that will be reported on the tax return * tax rate

Question 7

permanent differences

Answer 7

permanent differences have no deferred tax effect

Question 8

all deferred tax asset and liab

Answer 8

classifed as NONcurrent on b/s

Question 9

expenses claimed for tax purposes that will not be recognized for book purposes until next year is a

Answer 9

temporary difference that creates a deferred tax liability

Question 10

Which of the following should be disclosed in a company’s financial statements related to deferred taxes

Answer 10

1. The types and amounts of existing temporary difference and the nature
2. amount of each type of operating loss and tax carry forward

Question 11

two primary objectives of accounting for income taxes

Answer 11

1. To recognize the current-year amount of taxes payable or refundable, and
2. To recognize the amount of deferred tax liabilities and deferred tax assets reported for future tax consequences.

Question 12

deferred income taxes

Answer 12

noncurrent asset

Question 13

when does Deferred tax expense arise

Answer 13

when current year taxable income is less than net income per books

Question 14

effective tax rate equals

Answer 14

income tax expense divided by its net income before taxes

income tax exp = taxable income * current rate

Question 15

deferred tax asset liab under IFRS

Answer 15

Under IFRS, deferred tax assets may only be offset against deferred tax liabilities if they relate to the same tax jurisdiction.

Question 16

IFRS: how much Net operating loss can a company claim as deferred tax asset?

Answer 16

IFRS allows the recognition of tax benefits from tax loss carryforwards only to the extent that future profits are expected to be available. Can’t take more def. tax asset then the expected FUTURE income to offset it.

Question 17

temporary differences will be multiplied by which tax rate?

Answer 17

future tax rate

Question 18

Deferred tax expense arises when

Answer 18

current year taxable income is less than net income per books