Preview Assignment 6 (Chapter 18)

Income tax expense is based on:

A. pretax income

B. operating income

C. income from continuing operations

D. taxable income

A. pretax income

Deferred tax expense is the:

A. increase in a deferred tax liabiltiy

B. decrease in deferred tax asset

C. decrease in a deferred tax liabiltiy

D. none above

A. increase in a deferred tax liabiltiy

All of the following are examples of temporary differences that result in tax deductions (benefits) in future years, exept:

A. depreciable property

B. estimated liabilities realted to discontinued operations

C. product warranty liabilities

D. litigation accruals

A. depreciable property

Deferred income taxes are based on the:

A. current tax rate in all cases

B. future tax rates if they have been enacted into law

C. current tax rate or future tax rates, depending on when the temporary differencce will reverse

D. future tax rates in all cases

B. future tax rates if they have been enacted into law

The FASB believes that the most consistent method for accounting for income taxes is the

A. carryback-carryforward method

B. benefit-oblifation method

C. asset-liability method

D. temporary-permanent method

C. asset-liability method

Future deductible amounts will cause:

A. taxable income to be more than pretax financial income in the future

B. the recording of a deferred tax liability

C. a decrease in pretax financial income in future years

D. the recording of a deferred tax asset

D. the recording of a deferred tax asset

Income tax expense is computed as income tax payable:

A. plus or minus the change in provision for income taxes

B. less an increase in a degerred tax liability

C. less a decrease in a deferred tax asset

D. plus or minus the change in deferred income taxes

D. plus or minus the change in deferred income taxes

Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if

A. it is probable that a future tax rate change will occur

B. the future tax rates have been enacted into law

C. it appears likely that a future tax rate will be less than the current tax rate

D. it appears llikely that a future tax rate will be greater than the current tax rate

B. the future tax rates have been enacted into law

A deferred tax liability represents the:

A. increase in taxes payable in future years as a result of taxable temporary differences

B. increase in taxes saved in future years as a result of deductible temporary differences

C. decrease in taxes payable in future years as a result of taxavle temporary differences

D. decrease in taxes saved in future years as result of deductible temporary differences

A. increase in taxes payable in future years as a result of taxable temporary differences

Which of the following are temporary differences that are normally classified as expenses or losses and are deductible after they are recognized in financial income?

A. Advanced rental receipts

B. Depreciable property

C. Fines and expenses resulting from a violation of law

D. Product warranty liabilities

D. Product warranty liabilities