81. U.S. GAAP and IFRS require complex procedures in accounting for income taxes. A deferred tax asset arises when
A. a firm recognizes an expense earlier for financial reporting than for tax reporting.
B. a firm recognizes an expense earlier for tax reporting than for financial reporting.
C. a firm recognizes a revenue earlier for financial reporting than for tax reporting.
D. a firm recognizes a revenue earlier for tax reporting than for financial reporting.
E. none of the above
82. U.S. GAAP and IFRS require complex procedures in accounting for income taxes. For example, firms provide for estimated uncollectible accounts when they recognize sales on account but delay the tax deduction until later, when firms judge that particular customers’ accounts are uncollectible. In this example, a
A. deferred tax asset arises.
B. deferred tax liability arises.
C. firm recognizes a revenue earlier for financial reporting than for tax reporting.
D. firm recognizes a revenue earlier for tax reporting than for financial reporting.
E. firm recognizes an expense earlier for tax reporting than for financial reporting.
83. U.S. GAAP and IFRS require complex procedures in accounting for income taxes. For example, firms provide for estimated warranty cost in the year they sell warranted products but delay the tax deduction until later, when firms make actual expenditures for warranty repairs. In this example, a
A. deferred tax asset arises.
B. deferred tax liability arises.
C. firm recognizes a revenue earlier for financial reporting than for tax reporting.
D. firm recognizes a revenue earlier for tax reporting than for financial reporting.
E. firm recognizes an expense earlier for tax reporting than for financial reporting.
84. U.S. GAAP and IFRS require that some temporary differences create deferred tax assets. The temporary differences include the
A. provision for estimated uncollectible accounts when they recognize sales on account, only.
B. provision for estimated warranty cost in the year the warranted products are sold, only
C. recognition of tax-exempt interest income, only.
D. payment of municipal penalties and fines, only.
E. provision for estimated uncollectible accounts when they recognize sales on account, and the provision for estimated warranty cost in the year the warranted products are sold.
85. Firms recognize deferred tax assets only to the extent that they expect to generate sufficient taxable income to realize the assets in the form of tax savings in the future. U.S. GAAP requires use of a deferred _____ to reduce the balance in the _____ account to the amount the firm expects to realize in tax savings in the future.
A. tax asset valuation allowance; Deferred Tax Asset
B. tax expense; Deferred Tax Asset
C. tax asset valuation allowance; Deferred Tax Liability
D. tax expense; Deferred Tax Liability
E. tax expense; Deferred Tax Revenue
86. Firms recognize deferred tax assets only to the extent that they expect to generate sufficient taxable income to realize the assets in the form of tax savings in the future. IFRS requires that firms recognize the _____of deferred tax assets, with explanatory disclosures.
A. expected realizable amount
B. present value of the amount
C. future value of the amount
D. negotiated value of the amount
E. liquidation value of the amount
87. Deferred Tax Asset or Deferred Tax Liability accounts on the balance sheet can change each period due to which of the following factors?
A. Temporary differences originate or reverse during the current period.
B. Income tax rates expected to apply in future periods when temporary differences reverse or change during the current period.
C. A firm’s expectations of future taxable income, which affect whether a firm can realize the deferred tax assets through an actual reduction in cash outflows, change during the current period.
D. all of the above
E. none of the above
88. Acquired in-process research and development (IPR&D) is _____ for tax purposes and results in a(n) _____ effective tax rate.
A. never deductible; increased
B. never deductible; decreased
C. always deductible; increased
D. always deductible; decreased
E. deductible over a 15 year period; decreased
89. Notes to the financial statements provide additional information about income tax expense and deferred tax assets and deferred tax liabilities. Firms report which of the following?
A. components of income before income taxes
B. components of income tax expense
C. reconciliation from statutory to effective tax rate
D. components of deferred tax assets and liabilities
E. all of the above
90. Notes to the financial statements provide additional information about income tax expense and deferred tax assets and deferred tax liabilities. Firms do not report which of the following?
A. components of income before income taxes
B. components of income tax expense
C. reconciliation from statutory to effective tax rate
D. components of deferred tax assets and liabilities
E. components of taxable income after income taxes
