CHAPTER 19
ACCOUNTING FOR INCOME TAXES
IFRS questions are available at the end of this chapter.
TRUE-FALSE—Conceptual
Description
F 1. Taxable income.
F 2. Use of pretax financial income.
T 3. Taxable amounts.
T 4. Deferred tax liability.
F 5. Deductible amounts.
T 6. Deferred tax as...
CHAPTER 19
ACCOUNTING FOR INCOME TAXES
IFRS questions are available at the end of this chapter.
TRUE-FALSE—Conceptual
Answer No. Description
F 1. Taxable income.
F 2. Use of pretax financial income.
T 3. Taxable amounts.
T 4. Deferred tax liability.
F 5. Deductible amounts.
T 6. Deferred tax asset.
F 7. Need for valuation allowance account.
T 8. Positive and negative evidence.
F 9. Computation of income tax expense.
T 10. Taxable temporary differences.
F 11. Taxable temporary difference examples.
T 12. Permanent differences.
T 13. Applying tax rates to temporary differences.
F 14. Change in tax rates.
F 15. Accounting for a loss carryback.
T 16. Tax effect of a loss carryforward.
T 17. Possible source of taxable income.
T 18. Classification of deferred tax assets and liabilities.
F 19. Classification of deferred tax accounts.
F 20. Method used for accounting for income taxes.
MULTIPLE CHOICE—Conceptual
Answer No. Description
b 21. Differences between taxable and accounting income.
c 22. Differences between taxable and accounting income.
b 23. Determination of deferred tax expense.
a 24. Differences arising from depreciation methods.
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a 25. Temporary difference and a revenue item.
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b 26. Effect of future taxable amount.
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c 27. Causes of a deferred tax liability.
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d 28. Distinction between temporary and permanent differences.
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b 29. Identification of deductible temporary difference.
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c 30. Identification of taxable temporary difference.
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d 31. Identification of future taxable amounts.
c 32. Identify a permanent difference.
d 33. Identification of permanent differences.
d 34. Identification of temporary differences.
d 35. Difference due to the equity method of investment accounting.
b 36. Difference due to unrealized loss on marketable securities.
a 37. Identification of deductible temporary differences.
d 38. Identification of temporary difference.
,19 - 2 Test Bank for Intermediate Accounting, Fourteenth Edition
MULTIPLE CHOICE—Conceptual (cont.)
Answer No. Description
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c 39. Accounting for change in tax rate.
c 40. Appropriate tax rate for deferred tax amounts.
b 41. Recognition of tax benefit of a loss carryforward.
a 42. Recognition of valuation account for deferred tax asset.
d 43. Definition of uncertain tax positions.
c 44. Recognition of tax benefit with uncertain tax position.
d 45. Reasons for disclosure of deferred income tax information.
c 46. Classification of deferred income tax on the balance sheet.
b 47. Classification of deferred income tax on the balance sheet.
d 48. Basis for classification as current or noncurrent.
d 49. Income statement presentation of a tax benefit from NOL carryforward.
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c 50. Classification of a deferred tax liability.
c 51. Procedures for computing deferred income taxes.
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These questions also appear in the Problem-Solving Survival Guide.
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These questions also appear in the Study Guide.
*This topic is dealt with in an Appendix to the chapter.
MULTIPLE CHOICE—Computational
Answer No. Description
c 52 Calculate book basis and tax basis of an asset.
b 53. Calculate deferred tax liability balance.
a 54. Calculate current/noncurrent portions of deferred tax liability.
a 55. Calculate income tax expense for the year.
d 56. Calculate amount of deferred tax asset to be recognized.
c 57. Calculate current deferred tax liability.
b 58. Determine income taxes payable for the year.
d 59. Calculate amount of deferred tax asset to be recognized.
c 60. Calculate current/noncurrent portions of deferred tax liability.
d 61. Calculate amount deducted for depreciation on the tax return.
b 62. Calculate amount of deferred tax asset to be recognized.
d 63. Calculate deferred tax asset with temporary and permanent differences.
a 64. Calculate amount of DTA valuation account.
a 65. Calculate current portion of provision for income taxes.
a 66. Calculate deferred portion of income tax expense.
c 67. Computation of total income tax expense.
a 68. Calculate installment accounts receivable.
b 69. Computation of pretax financial income.
a 70. Calculate deferred tax liability amount.
a 71. Calculate income tax expense for the year.
d 72. Calculate income tax expense for the year.
b 73. Computation of income tax expense.
c 74. Computation of income tax expense.
d 75. Computation of warranty claims paid.
b 76. Calculate taxable income for the year.
d 77. Calculate deferred tax asset amount.
b 78. Calculate deferred tax liability balance.
b 79. Calculate income taxes payable amount.
, Accounting for Income Taxes 19 - 3
MULTIPLE CHOICE—Computational (cont.)
Answer No. Description
a 80. Calculate deferred tax asset amount.
b 81. Calculate taxable income for the year.
b 82. Calculate pretax financial income.
a 83. Calculate deferred tax liability with changing tax rates.
c 84. Calculate deferred tax liability amount.
d 85. Calculate income tax expense with changing tax rates.
b 86. Determine change in deferred tax liability.
b 87. Calculate deferred tax liability with changing tax rates.
d 88. Calculate loss to be reported after NOL carryback.
d 89. Calculate loss to be reported after NOL carryback.
b 90. Calculate loss to be reported after NOL carryforward.
a 91. Determine income tax refund following an NOL carryback.
a 92. Calculate income tax benefit from an NOL carryback.
d 93. Calculate income tax payable after NOL carryforward.
c 94. Calculate deferred tax asset after NOL carryforward.
MULTIPLE CHOICE—CPA Adapted
Answer No. Description
a 95. Determine current income tax liability.
a 96. Determine current income tax liability.
c 97. Deferred tax liability arising from depreciation methods.
d 98. Deferred tax liability when using equity method of investment accounting.
d 99. Calculate deferred tax liability and income taxes currently payable.
b 100. Determine current income tax expense.
a 101. Deferred income tax liability from temporary and permanent differences.
a 102. Deferred tax liability arising from installment method.
c 103. Differences arising from depreciation and warranty expenses.
c 104. Deferred tax asset arising from warranty expenses.
EXERCISES
Item Description
E19-105 Computation of taxable income.
E19-106 Future taxable and deductible amounts (essay).
E19-107 Deferred income taxes.
E19-108 Deferred income taxes.
E19-109 Recognition of deferred tax asset.
E19-110 Permanent and temporary differences.
E19-111 Permanent and temporary differences.
E19-112 Temporary differences.
E19-113 Operating loss carryforward.
, 19 - 4 Test Bank for Intermediate Accounting, Fourteenth Edition
PROBLEMS
Item Description
P19-114 Differences between accounting and taxable income and the effect on deferred
taxes.
P19-115 Multiple temporary differences.
P19-116 Deferred tax asset.
P19-117 Interperiod tax allocation with change in enacted tax rates.
CHAPTER LEARNING OBJECTIVES
1. Identify differences between pretax financial income and taxable income.
2. Describe a temporary difference that results in future taxable amounts.
3. Describe a temporary difference that results in future deductible amounts.
4. Explain the purpose of a deferred tax asset valuation allowance.
5. Describe the presentation of income tax expense in the income statement.
6. Describe various temporary and permanent differences.
7. Explain the effect of various tax rates and tax rate changes on deferred income taxes.
8. Apply accounting procedures for a loss carryback and a loss carryforward.
9. Describe the presentation of deferred income taxes in financial statements.
10. Indicate the basic principles of the asset-liability method.
*11. Understand and apply the concepts and procedures of interperiod tax allocation.
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