Scribd
Upload
976 views2 pages

Which of The Following Is The Most Likely Item To Result in A Deferred Tax Asset

The document contains multiple choice questions about deferred tax assets and liabilities. Using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes would likely result in a deferred tax asset (question 1). Depreciation ordinarily results in a deferred tax liability as it is deducted faster for tax purposes (question 2). Recognizing tax benefits in a loss year due to a loss carryforward requires creating a deferred tax asset (question 3).

Uploaded by

Allen Kate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
976 views2 pages

Which of The Following Is The Most Likely Item To Result in A Deferred Tax Asset

The document contains multiple choice questions about deferred tax assets and liabilities. Using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes would likely result in a deferred tax asset (question 1). Depreciation ordinarily results in a deferred tax liability as it is deducted faster for tax purposes (question 2). Recognizing tax benefits in a loss year due to a loss carryforward requires creating a deferred tax asset (question 3).

Uploaded by

Allen Kate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Which of the following is the most likely item to result in a deferred tax asset?

a. Using accelerated depreciation for tax purposes but straight-line depreciation for
accounting purposes
b. Using the completed-contract method of recognizing construction revenue tax purposes,
but using percentage-of-completion method for financial reporting purposes
c. Prepaid expenses
d. Unearned revenues
ANS: D PTS: 1 DIF: Easy OBJ: LO 1
TOP: AICPA FN-Measurement MSC: AACSB Analytic

11. Which of the following temporary differences ordinarily results in a deferred tax liability?
a. Accrued warranty costs
b. Unrealized losses on marketable securities
c. Depreciation
d. Subscription revenue received in advance
ANS: C PTS: 1 DIF: Easy OBJ: LO 2
TOP: AICPA FN-Measurement MSC: AACSB Analytic

12. When enacted tax rates change, the asset and liability method of interperiod tax allocation recognizes the
rate change as
a. a cumulative effect adjustment.
b. an adjustment to be netted against the current income tax expense.
c. a separate charge to the current year's net income.
d. a separate charge or benefit to income tax expense.
ANS: D PTS: 1 DIF: Medium OBJ: LO 4
TOP: AICPA FN-Measurement MSC: AACSB Analytic

Recognizing tax benefits in a loss year due to a loss carryforward requires


a. only a footnote disclosure.
b. creating a new carryforward for the next year.
c. creating a deferred tax asset.
d. creating a deferred tax liability.
ANS: C PTS: 1 DIF: Medium OBJ: LO 3
TOP: AICPA FN-Measurement MSC: AACSB Analytic

14. A company would most likely choose the carryforward option for a net operating loss if the company
expected
a. higher tax rates in the future compared to the past.
b. lower tax rates in the future compared to the past.
c. lower earnings in the future compared to the past.
d. higher earnings in the future compared to the past.
ANS: A PTS: 1 DIF: Easy OBJ: LO 3
TOP: AICPA FN-Measurement MSC: AACSB Analytic

15. All of the following can result in a temporary difference between pretax financial income and taxable
income except
a. payment of premiums for life insurance.
b. depreciation expense.
c. contingent liabilities.
d. product warranty costs.
ANS: A PTS: 1 DIF: Easy OBJ: LO 1
TOP: AICPA FN-Measurement MSC: AACSB Analytic

16. Which of the following items results in a temporary difference deductible amount for a given year?
a. Premiums on officer's life insurance (company is beneficiary)
b. Premiums on officer's life insurance (officer is beneficiary)
c. Vacation pay accrual
d. Accelerated depreciation for tax purposes; straight-line for financial reporting purposes
ANS: C PTS: 1 DIF: Easy OBJ: LO 1
TOP: AICPA FN-Measurement MSC: AACSB Analytic

You might also like