Question 2 of 51

Which of the following terms best describes the net amount of an asset or liability used for tax reporting purposes?

A deferred tax liability is most likely created when:

Which of the following items typically results in the creation of a deferred tax asset?

A permanent difference between taxable income and pretax income:

An asset has a carrying value of $100,000 and a tax base of $80,000. The tax rate is 30 percent. This situation creates a:

At year-end, a firm has a warranty liability with a carrying value of $5,000. Warranty expense is not deductible for tax purposes until paid. The tax base of this liability is:

A firm receives $10,000 in advance for services. This amount is taxed immediately but recognized as revenue next year. The tax rate is 25 percent. This creates a:

If a company uses the straight-line depreciation method for financial reporting and an accelerated method for tax reporting, in the early years of the asset's life, this will most likely result in:

For a liability, if the carrying value is greater than the tax base, this typically results in:

When the income tax rate increases, the balance of a deferred tax liability will:

A firm has a deferred tax asset of $10,000 resulting from a tax rate of 25 percent. If the tax rate decreases to 20 percent, the adjustment to the deferred tax asset will result in:

If a company has a deferred tax liability and the tax rate increases, the adjustment to the liability on the balance sheet will be:

Which of the following creates a permanent difference?

The statutory tax rate is 35 percent. A firm has taxable income of $100,000 and tax-exempt municipal bond interest of $10,000. The effective tax rate is closest to:

Under U.S. GAAP, a valuation allowance is required for a deferred tax asset if:

An increase in the valuation allowance for deferred tax assets will result in:

When comparing IFRS and U.S. GAAP regarding income taxes, which of the following is accurate?

Under IFRS, deferred tax assets and liabilities are measured using:

A firm has an asset with a carrying value of $200,000 and a tax base of $150,000. The tax rate is 25 percent. The firm reports a deferred tax liability of:

Taxable income is defined as:

Accounting profit is also known as:

If a firm has taxable losses in excess of its taxable income, it can create a:

Which of the following would be classified as a permanent difference?

If deferred tax liabilities are not expected to reverse in the future, an analyst should typically treat them as:

A firm has a deferred tax liability of $40,000 at the beginning of the year. At the end of the year, the liability is $50,000. Taxes payable for the year are $80,000. Income tax expense is:

Which of the following best describes the tax base of an asset?

Research and development costs expensed on the income statement but capitalized for tax purposes create:

A firm sells an asset for $100,000. The carrying value is $90,000 and the tax base is $80,000. What is the effect on the deferred tax liability related to this asset?

If a firm has a net deferred tax asset position, a decrease in the corporate tax rate will:

For analytical purposes, if a deferred tax liability is expected to increase indefinitely due to growth in capital expenditures, it should be treated as:

A valuation allowance is a contra account that reduces the value of:

Under IFRS, the deferred tax liability resulting from an upward revaluation of fixed assets is recognized in:

Under IFRS, deferred tax assets and liabilities are classified on the balance sheet as:

The statutory tax rate is:

An effective tax rate lower than the statutory tax rate is most likely caused by:

Which of the following is required to be disclosed regarding deferred taxes?

A reduction in the valuation allowance will result in:

If a firm has a deferred tax liability of $50,000 and a deferred tax asset of $20,000, and the tax rate decreases, the impact on equity is:

A firm records $100,000 of warranty expense in its financial statements. Actual warranty payments were $20,000. The tax rate is 40%. The increase in the deferred tax asset is:

Deferred tax liability arising from an investment in a subsidiary is:

A temporary difference results in a deferred tax asset if:

Which of the following creates a temporary difference?

If a firm recognizes a valuation allowance of $500 against a deferred tax asset of $2,000, the net deferred tax asset reported is:

A decrease in the tax rate would result in a decrease in which of the following?

Income tax paid is defined as:

A firm has an effective tax rate of 40% and a statutory rate of 35%. This is most likely due to:

Regarding the classification of cash flows, IFRS allows interest paid to be classified as:

The term 'tax loss carryforward' refers to:

Deferred tax items for a firm reporting under U.S. GAAP are typically:

If a firm uses LIFO for U.S. GAAP financial statements, it must: