ACC 317 Quiz 3 Chapter 17,100% CORRECT

TF Qu. 11 In general, a temporary difference reflects ... In general, a temporary difference reflects a difference in the financial basis and tax basis of an asset or liability on the balance sheet. True False 2. ...

TF Qu. 11 In general, a temporary difference reflects ... In general, a temporary difference reflects a difference in the financial basis and tax basis of an asset or liability on the balance sheet. True False 2. Award: 4 out of 4.00 points TF Qu. 13 Brown Corporation reports $100,000 of gain f... Brown Corporation reports $100,000 of gain from the sale of land on its income statement. For tax purposes, Brown uses the installment method and reports gain of $10,000. The $90,000 difference in the gain reported is a deductible temporary difference. True False 3. Award: 4 out of 4.00 points MC Qu. 38 Which of the following items is not a tempor... Which of the following items is not a temporary difference? Vacation pay accrued for tax purposes in a prior period is deducted in the current period Tax depreciation for the period exceeds book depreciation Bad debts charged off in the current period exceed the bad debts accrued in the current period A goodwill impairment expense is recorded on the income statement; the goodwill did not have a tax basis when it was created The goodwill impairment expense is a permanent difference because it did not have a tax basis. 4. Award: 4 out of 4.00 points MC Qu. 51 A valuation allowance is recorded against a ... A valuation allowance is recorded against a deferred tax asset when: It is more likely than not that the deferred tax asset will not be realized in the future It is highly likely the deferred tax asset will not be realized in the future It is probable that the deferred tax asset will not be realized in the future It is remote the deferred tax asset will not be realized in the future ASC 740 applies a more-likely-than-not test to whether a tax benefit will be realized (a likelihood greater than 50 percent). 5. Award: 4 out of 4.00 points MC Qu. 26 Which of the following taxes would not be ac... Which of the following taxes would not be accounted for under ASC 740? Income taxes paid to the City of New York. Income taxes paid to the German government. Value-added taxes paid to the Swiss government. Income taxes paid to the U.S. government. A value-added tax is not an income tax. 6. Award: 4 out of 4.00 points MC Qu. 31 Which of the following statements is true? Which of the following statements is true? Another name for a deductible temporary difference is a permanent difference Another name for a taxable temporary difference is an unfavorable difference Another name for a deductible temporary difference is a favorable difference Another name for a taxable temporary difference is a favorable difference A favorable temporary difference causes current year taxable income to be less than current year book income. In a subsequent year, the difference will reverse creating a taxable event. 7. Award: 4 out of 4.00 points MC Qu. 29 Which of the following items does not result... Which of the following items does not result in a permanent difference? Dividend received deduction on the income tax return Interest income from a tax-exempt municipal bond Domestic manufacturing deduction on the income tax return Accelerated tax depreciation in excess of straight-line book depreciation Depreciation differences create temporary differences. 8. Award: 4 out of 4.00 points MC Qu. 72 TarHeel Corporation reported pretax book inc... TarHeel Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for warranties increased by $25,000. In addition, tax depreciation exceeded book depreciation by $100,000. Finally, TarHeel subtracted a dividends received deduction of $25,000 in computing its current year taxable income. Assume a tax rate of 34%. TarHeel's accounting effective tax rate is: 31.45% 30.6% 33.15% 34% The effective tax rate is the hypothetical tax rate (34%) adjusted for the tax cost or benefit from permanent differences. In this example, the dividends received deduction reduces the effective tax rate by 0.85% ($25,000 × 34%). 9. Award: 4 out of 4.00 points MC Qu. 47 Which of the following statements is true? Which of the following statements is true? A change in capitalized inventory costs under §263A always produces an increase in a deferred tax asset. A change in capitalized inventory costs under §263A can produce an increase or a decrease in a deferred tax asset. A change in capitalized inventory costs under §263A always produces a permanent difference. A change in capitalized inventory costs under §263A always produces a decrease in a deferred tax asset. A change in capitalized inventory costs under §263A can cause an increase or decrease in a deferred tax asset, depending on whether the net change (beginning inventory to ending inventory) increases or decreases 10. Award: 4 out of 4.00 points MC Qu. 35 Abbot Corporation reported pretax book incom... Abbot Corporation reported pretax book income of $500,000. During the current year, the reserve for bad debts increased by $5,000. In addition, tax depreciation exceeded book depreciation by $40,000. Finally, Abbot received $3,000 of tax-exempt life insurance proceeds from the death of one of its officers. Using a tax rate of 34%, Abbot's current income tax expense or benefit would be: $153,680 $170,000 $157,080 $186,320 ($500,000 + $5,000 - $40,000 - $3,000 = $462,000) × 34%= $157.080