ACCT 304 test 1

Lyon's group's income before taxes is $450,000 and its tax rate is 30%. Lyon included $30,000 in fines and penalties in $450,000. What is the income tax liability for LYon Group

144,000 (450,000+30,000)*.30

All of the following are examples of temporary book tax differences except

Payment of premiums for life insurance

S & C company reported $200,000 depreciation on its 2015 tax return, however, they reported $50,000 depreciation expense on their 2015 income statement. The difference in depreciation is a temporary difference that will reverse over time. Assuming S & C's tax rate is constant at 30% what amount should be added to the deferred income tax liability.

45,000 (200,000-50,000)*.30

Mathis Co. at the end of 2014, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as followed: pretax financial income=800,000 Estimated litigation expense = 2,000,000 Installment sales (1,300,000) Taxable income =1,200,000 The gross profit is $800,000 and tax rate 30%

800,000*.30

Rodd inc reports a taxable and pretax loss of $800,000. 2013's income =800,000 at 30% 2014= 800,000 at 35% 2015 tax rate is 40%

80000*.30 = 240000 A

Stuart corporations taxable income differed from its accounting income computed for this past year. an item that woudl create a permanent difference would be

A fine resulting from violations of OSHA regulations

Which of the following temporary differences results in a deferred tax asset in the year the tempoary difference originates

Accrual for product warranty liability subscription received in advance

companies are required to disclose the amount of income tax expense that is

All of the above current deferred allocated to financial statement elements that are not

An example of a permanent difference is

All of these

Kravitz corporation had income before taxes of $850,000 and a tax rate of 35%. Include in the income are $60,000 in municipal bond interest and $10,000 in fines and penalties. Ther are no other book-tax differences

Book income that is $50,000 greater than taxable income

Kravitz corporation had income before taxes of $850,000 and a tax rate of 35%. Included was $60,000 in municipal bonds and $10,000 in fines. What is the net amount of KRavitz book tax difference?

Book income that is 50,000 greater than the taxable amount

Deferred taxes should be presented on the balance sheet

C. In two amounts: one for the net debit amount and one for the net credit amount

A major distinction between temporary and permanent differences

Temporary differences reverse themselves in subsequent accounting periods. Whereas permanent differences do not reverse

a deferred tax asset exists when

The book basis of assets is greater than the tax basis of assets

A company records an unrealized loss on short-term securities. this would result in what type of difference and in what type of deferred income tax

Type of difference= temporary Deferred tax= asset

When a company depreciates a fixed asset at a faster rate for tax purposes than book purposes it creates

a deferred tax liability

Which of the following statements best describes the effective tax rate

it can be calculated by dividing income tax expense by book income before deductions

Which of the following best describe the effective tax rate

it can be calculated by dividing income tax expense by book income before tax

Nickerson coporation has the following data 2013 45% 2014 40% 2015 35# 2016 30% Taxavle income 2013 = 1500000 and taxes paid 675000 2014= 1800000 and 720000 paid They had an operating loss of 1860000

(15000000*.45)+(1860000-1500000*.40) 819000 A

Khan Inc. reports a loss of 1950000 the pretax income the last two years is: 2013 =900000 2014 = 1200000 Tax rate =30%

(195000)-(30%*1950000) 1365000 loss D

Diddle corp prepared reconciliation tables

1,320,000*.34 B 448,800

Lyon Group's income before taxes is $450,000 and its tax rate is 30%. Lyons included $30,000 in fines and penalties in the $450,000. What is the income tax liability

144,000 (450,000+30000)*.30

Temporary difference Installment = 288,000 Depreciation =90,000 Unearned rent =300,000

267,000 (345000-288000-90000+300000

Rowen inc. had pretax income of $1,800,000 and a tax rate of 40%. Also had the following transactions: Received rent for 2016 =64,000 Municipal bond income= 80000 depreciation 40000 installment sales rev. What wis the amount of income taxes payable

654,400 B (1,800,000+64000-80000-40000-108000) * .40

Which of the following is a temporary difference classified as a revenue gain that is taxable after it is recognized in financial income

An installment sale accounted for on the accrual basis for financial reporting purposes and on the installment (cash) basis for tax purposes

A temporary difference arises when a revenue item is reported for tax purposes in a period

Both after and before in financial income

Recognizing allowance for a deferred tax asset requires that a company

Consider all positive and negative information to determine the need for valuation allowances

Tanner inc. incurred Tanner, Inc. incurred a financial and taxable loss for 2013. Tanner therefore decided to use the carryback provisions as it had been profitable up to this year. How should the amounts related to the carryback be reported in the 2013 financial statements? a. The reduction of the loss should be reported as a prior period adjustment. b. The refund claimed should be reported as a deferred charge and amortized over five years. c. The refund claimed should be reported as revenue in the current year. d. The refund claimed should be shown as a reduction of the loss in 2013.

D. the refund claimed should be shown as a reduction of the loss in 2015

Which of the following will not result in a temporary difference

all of these will: product warranty liability Advance rental receipts installment sales

Taxable income of a corporation differs from pretax financial income because of

both permanent and temporary differences

Charmed inc. income before taxes is $710,000 and its tax rate is 35%. Charmed included $40,000 in non deductible life insurance proceeds in the $710,000, What is the journal entry

ncome tax expense 262,500 Income Tax payable 262500

Dante inc. reported fines and penalties on their income statement this year. Whta is the book tax difference

permanent difference- book income less than taxable income

The contra-asset to the deferred tax assett account is called

valuation allowance