Exam (elaborations)

Chapter 16 ACG 4111 Exam Study Guide

3 views 0 purchase

Course
2024/2025

Institution
2024/2025

Chapter 16 ACG 4111 Exam Study Guide deferred tax liability - ANSWER-If tax laws allow a company to postpone paying taxes on activities reported in the current period's income statement, the company must report a deferred tax liability because the company anticipates those activities will lead t...

[Show more]

Preview 3 out of 19 pages

View example

Uploaded on October 30, 2024
Number of pages 19
Written in 2024/2025
Type Exam (elaborations)
Contains Questions & answers

chapter 16 acg 4111 exam study guide

Institution 2024/2025
Course 2024/2025

CA$16.64

Added

Add to cart

Add to wishlist

100% satisfaction guarantee
Immediately available after payment
Both online and in PDF
No strings attached

©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED

FIRST PUBLISH OCTOBER 2024

Chapter 16 ACG 4111 Exam Study Guide

deferred tax liability - ANSWER✔✔-If tax laws allow a company to postpone paying taxes on activities

reported in the current period's income statement, the company must report a deferred tax liability

because the company anticipates those activities will lead to future taxable amounts.

deferred tax asset - ANSWER✔✔-if tax laws require the company to pay more tax than is indicated by the

activities reported in the current period's income statement, the company reports a deferred tax asset

reflecting the benefit of future deductible amounts

what does tax expense include - ANSWER✔✔-Each year's tax expense reported in the income statement

includes not only a current portion related to tax payable in the current year but also a deferred portion

that includes any changes in deferred tax assets and liabilities.

examples of deferred tax liabilities - ANSWER✔✔--installment sales

-unrealized gain from recording investments at fair value

-accelerated depreciation

-prepaid expenses

examples of deferred tax assets - ANSWER✔✔--estimated expenses and losses

Page 1/19

, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED

FIRST PUBLISH OCTOBER 2024

-unrealized loss from recording investments at FV

-rent collected in advance

-subscriptions collected in advance

-other revenue collected in advance

At the beginning of 2021, Wyatt Company purchased equipment for $800. The equipment has a four

year useful life and Wyatt uses straight line depreciation method. Under the tax laws Wyatt is able to

fully depreciate the equipment for tax purposes in the year of purchase. Wyatt has a tax rate of 25%. As

a result of this transaction, Wyatt's tax expense journal entry in 2021 would include a:

a.Debit to deferred tax liability for $600

b.Credit to deferred tax liability for $600

c.Debit to deferred tax liability for $150

d.Credit to deferred tax liability for $150 - ANSWER✔✔-a.Credit to deferred tax liability for $150

Windsor Company started 2021 with a deferred tax liability of $150. As of the end of the period, Windsor

identifies future taxable amounts of $800. Windsor has a tax rate of 25%, and calculates that taxes

payable will be $120. Windsor's tax expense journal entry will include a:

a.Debit to tax expense for $200

Page 2/19

, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED

FIRST PUBLISH OCTOBER 2024

b.Debit to tax expense for $170

c.Debit to tax expense for $50

d.Credit to tax for $30 - ANSWER✔✔-a.Debit to tax expense for $170

how can deferred tax assets and liabilities be computed from temporary book-tax differences -

ANSWER✔✔-calculated by multiplying the temporary book-tax difference by the applicable tax rate

Hardy Welders Inc. had purchased a machine at the beginning of year 1 for $2,000,000. The machine has

a useful life of 10 years and a book value of $1,800,000 at the beginning of year 2. Hardy depreciates the

machine on a straight line basis for financial reporting purposes but fully depreciates it on the date of

purchase for tax purposes. Hardy pays taxes at a rate of 25%. Hardy's year 2 balance sheet should

include a deferred tax liability of:

a.$1,600,000

b.$400,000

c.$0

d.Insufficient information to answer - ANSWER✔✔-b 400000

Shortly before the end of 2021, Colter Company makes an installment sale that generates $400 of

before-tax income. Colter recognizes income for accounting purposes when the sale is made, but will

Page 3/19

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Emillect. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for CA$16.64. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

77988 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling