Question 1

A company had taxable income of $2 million in fiscal 2016 and paid taxes of 0.4 million;the company incurred a loss of $0.5 million in fiscal 2018 when the tax rate is 30%.How much refund is the company entitled to?

Accepted Answer

B) 0.5 million × 20% (tax rate in effect in fiscal 2016)

Question 2

A company has a deferred tax liability of $20,000 at the beginning of the fiscal year relating to a taxable temporary difference of $80,000.The current year tax rate is 20%.
Required:
Provide the journal entry to reflect the tax rate change.

Accepted Answer

The answer of A company has a deferred tax liability...

Question 3

In the first two years of operations,a company reports taxable income of $125,000 and $165,000,respectively.In the first two years,the tax rates were 44% and 48% respectively.It is now the end of the third year,and the company has a loss of $260,000 for tax purposes.The company carries losses to the earliest year possible.The tax rate is currently 25%.
Required:
a.How much tax was paid in year 1 and year 2?
b.Compute the amount of income tax payable or receivable in the current (third)year.

Accepted Answer

The answer of In the first two years of operations,a...

Question 4

In the first year of operations,a company reports taxable income of $225,000 and paid a tax rate of 28%.It is now the end of the second year,and the company has a loss of $375,000 for tax purposes.The company's management believes it is probable the company will be able to use up its tax losses.The tax rate is currently 32%.
Required:
Compute the amounts of income tax receivable and/ or deferred income tax asset in the current (second)year.

Accepted Answer

The answer of In the first year of operations,a company...

Question 5

A company had taxable income of $2 million in fiscal 2017 and paid taxes of 0.6 million;the company incurred a loss of $7 million in fiscal 2018 when the tax rate is 50%.How much refund is the company entitled to?

Accepted Answer

B) 2 million × 30% (tax rate in effect in fiscal 2017)

Question 6

A company had taxable income of $12 million in fiscal 2016 and paid taxes of 4.8 million;the company incurred a loss of $7 million in fiscal 2017 when the tax rate is 50%.How much refund is the company entitled to?

Accepted Answer

B) 7 million × 40% (tax rate in effect in fiscal 2016)

Question 7

In the first two years of operations,a company reports taxable income of $125,000 and $65,000,respectively.In the first two years,the company paid $50,000 and $13,000.It is now the end of the third year,and the company has a loss of $160,000 for tax purposes.The company carries losses to the earliest year possible.The tax rate is currently 25%.
Required:
Compute the amount of income tax payable or receivable in the current (third)year.

Accepted Answer

The answer of In the first two years of operations,a...

Question 8

In the first year of operations,a company reports taxable income of $125,000 and paid $31,250 of income taxes.It is now the end of the second year,and the company has a loss of $175,000 for tax purposes.The company's management believes it is probable the company will be able to use up its tax losses.The tax rate is currently 40%.
Required:
Compute the amounts of income tax receivable and/ or deferred income tax asset in the current (second)year.

Accepted Answer

The answer of In the first year of operations,a company...

Question 9

A company has a deferred tax liability of $120,000 at the beginning of the fiscal year relating to a taxable temporary difference of $300,000.The current year tax rate is 50%.
Required:
Provide the journal entry to reflect the tax rate change.

Accepted Answer

The answer of A company has a deferred tax liability...

Question 10

In the first two years of operations,a company reports taxable income of $200,000 and $250,000,respectively.In these two years,the company paid $45,000 and $56,000,respectively,in income taxes.It is now the end of the third year,and the company has a loss of $420,000 for tax purposes.The company carries losses to the earliest year possible.The tax rate is currently 25%.
Required:
Compute the amount of income tax payable or receivable in the current (third)year.

Accepted Answer

The answer of In the first two years of operations,a...

Question 11

Explain why a company should carry back losses and why a company might choose to carry losses forward instead.

Accepted Answer

The answer of Explain why a company should carry back...

Question 12

A company has a deferred tax liability of $120,000 at the beginning of the fiscal year relating to a taxable temporary difference of $300,000.The current year tax rate is 20%.
Required:
Provide the journal entry to reflect the tax rate change.

Accepted Answer

The answer of A company has a deferred tax liability...

Question 13

Which statement is correct?

Accepted Answer

The income tax system treats income and losses asymmetrically. Losses can be carried forward to offset future profits, but there is often a limit on the amount of loss that can be carried forward, and there may be restrictions on how long losses can be carried forward. Additionally, losses may not be able to be used to offset income from different sources or in different tax years. This treatment of losses is not symmetrical with the treatment of income, and therefore choice B is correct. Choices A, C, and D are incorrect.

Question 14

State whether or not discounting of deferred assets and liabilities is required or permitted and explain why or why not.

Accepted Answer

The answer of State whether or not discounting of deferred...

Question 15

A company had taxable income of $2 million in fiscal 2017 and paid taxes of .7 million;the company incurred a loss of $8 million in fiscal 2018 when the tax rate is 50%.How much refund is the company entitled to?

Accepted Answer

B) 2 million × 35% (tax rate in effect in fiscal 2017)

Question 16

During its first year of operations,Keen Corp.reported the following information:
∙ Income before income taxes for the year was $650,000 and the tax rate was 25%.
∙ Depreciation expense was $200,000 and CCA was $100,000.The carrying amount of property,plant,and equipment at the end of the year was $720,000,while UCC was $820,000.
∙ Warranty expense was reported at $110,000,while actual cash paid out was $60,000.
∙ $15,000 of expenses included in income were not deductible for tax purposes.
∙ No other items affected deferred tax amounts besides these transactions.
Required:
a.Prepare the journal entries to record income tax expense for the year.
b.Assume Keen reported a loss instead of income in its first year of operations.Explain what accounting policy choices are available to Keen to record the tax implications of the loss,and provide a recommendation.

Accepted Answer

The answer of During its first year of operations,Keen Corp.reported...

Question 17

During its first year of operations,Karol Corp.reported the following information:
∙ Income before income taxes for the year was $550,000 and the tax rate was 35%.
∙ Depreciation expense was $100,000 and CCA was $50,000.
∙ Warranty expense was reported at $20,000,while actual cash paid out was $10,000.
∙ $25,000 of expenses included in income were not deductible for tax purposes.
∙ No other items affected deferred tax amounts besides these transactions.
Required:
Prepare the journal entries to record income tax expense for the year.

Accepted Answer

The answer of During its first year of operations,Karol Corp.reported...

Question 18

In the first two years of operations,a company reports taxable income of $115,000 and $165,000,respectively.In the first two years,the tax rates were 38% and 32% respectively.It is now the end of the third year,and the company has a loss of $160,000 for tax purposes.The company carries losses to the earliest year possible.The tax rate is currently 25%.
Required:
a.How much tax was paid in year 1 and year 2?
b.Compute the amount of income tax payable or receivable in the current (third)year.

Accepted Answer

The answer of In the first two years of operations,a...

Question 19

A company has a deferred tax liability of $20,000 at the beginning of the fiscal year relating to a taxable temporary difference of $80,000.The current year tax rate is 30%.
Required:
Provide the journal entry to reflect the tax rate change.

Accepted Answer

The answer of A company has a deferred tax liability...

Question 20

Which statement is true?

Accepted Answer

Carrying tax losses forward is a strategy used when a company cannot carry losses backward, either due to legislative limitations or because there are no profits in the preceding years to offset. This allows the company to apply the losses to future taxable income, potentially reducing future tax liabilities.

Quiz 16: Accounting for Income Taxes

A company had taxable income of $2 million in fiscal 2016 and paid taxes of 0.4 million;the company incurred a loss of $0.5 million in fiscal 2018 when the tax rate is 30%.How much refund is the company entitled to?

A company has a deferred tax liability of $20,000 at the beginning of the fiscal year relating to a taxable temporary difference of $80,000.The current year tax rate is 20%. Required: Provide the journal entry to reflect the tax rate change.

A company had taxable income of $2 million in fiscal 2017 and paid taxes of 0.6 million;the company incurred a loss of $7 million in fiscal 2018 when the tax rate is 50%.How much refund is the company entitled to?

A company had taxable income of $12 million in fiscal 2016 and paid taxes of 4.8 million;the company incurred a loss of $7 million in fiscal 2017 when the tax rate is 50%.How much refund is the company entitled to?

A company has a deferred tax liability of $120,000 at the beginning of the fiscal year relating to a taxable temporary difference of $300,000.The current year tax rate is 50%. Required: Provide the journal entry to reflect the tax rate change.

Explain why a company should carry back losses and why a company might choose to carry losses forward instead.

A company has a deferred tax liability of $120,000 at the beginning of the fiscal year relating to a taxable temporary difference of $300,000.The current year tax rate is 20%. Required: Provide the journal entry to reflect the tax rate change.

Which statement is correct?

State whether or not discounting of deferred assets and liabilities is required or permitted and explain why or why not.

A company had taxable income of $2 million in fiscal 2017 and paid taxes of .7 million;the company incurred a loss of $8 million in fiscal 2018 when the tax rate is 50%.How much refund is the company entitled to?

A company has a deferred tax liability of $20,000 at the beginning of the fiscal year relating to a taxable temporary difference of $80,000.The current year tax rate is 30%. Required: Provide the journal entry to reflect the tax rate change.

Which statement is true?