Quiz – Black Inc.
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
Estimate the effective tax rate and determine why it is different from the federal statutory rate.
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Estimate the effective tax rate and determine why it is different from the federal statutory rate.
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Given the firm’s pretax accounting income, its overweight fines, and depreciation expense in both the income statement and tax return, determine if the firm has a deferred tax asset or deferred tax liability and whether it is a current or noncurrent item.
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Determine what the company should disclose in its income statement in relation to its income tax expense.
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Given the pretax accounting income and taxable income, they ask you to prepare the compound journal entry to record the company’s income taxes.
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Determine the amount the company should report as a noncurrent item related to deferred income taxes in its balance sheet.
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Temporary differences originate in a single period and then reverse in future periods.
The creation of deferred tax liabilities results from expenditures that are currently deducted in the tax return but not included in the income statement until future years.
Deferred tax assets and liabilities represent the tax impact of temporary differences between the financial carrying value and the tax basis of an asset or liability.
Deferred tax assets are created as a result of collecting rent in advance.
MACRS depreciation commonly results in the creation of deferred tax liabilities in the initial years of an asset’s life.