Reading 38: Analysis of Income Taxes - LOS d ～ Q1-5

答案和详解如下：

1.For analytical purposes, if a deferred tax liability is expected to not be reversed, it should be treated as a(n):

A)   immaterial amount and ignored.

B)   liability.

C)   asset.

D)   an addition to equity.

The correct answer was D)    

If deferred tax liabilities are expected to never reverse, they should be treated as equity for analytical purposes. This situation usually arises because of growth in capital expenditures.

2.Which of the following financial ratios is least likely to be affected by classification of deferred taxes as a liability or equity?

A)   Return on equity (ROE).

B)   Debt-to-equity.

C)   Debt-to-total assets.

D)   Return on assets (ROA).

The correct answer was D)

The ROA will not be affected by the classification of the deferred taxes. The total assets will remain the same regardless of whether the deferred taxes are classified as a liability or equity.

3.Which of the following factors will NOT impact the classification of deferred tax liabilities?

A)   Present value of the future payments.

B)   Growth of the firm.

C)   Changes in firm operations.

D)   Changes in tax laws.

The correct answer was A)

The present value of the future payments will not impact the classification of deferred tax liabilities. Growth of the firm, changes in tax laws and the firm’s operations can all have an impact on classification of deferred tax liabilities. These can result in non-payment of deferred taxes even if they are reversed.

4.Which of the following statements regarding deferred taxes is FALSE?

A)   If deferred taxes are not expected to reverse in the future then they should be classified as equity.

B)   If deferred tax liabilities are not included in equity, debt-to-equity ratio will be reduced.

C)   Only those components of deferred tax liabilities that are likely to reverse should be considered a liability.

D)   An analyst must judge a company’s deferred tax accounts on a case-by-case basis.

The correct answer was B)

When deferred tax liabilities are included in equity, it will reduce the debt-to-equity ratio (by increasing the denominator), in some cases considerably.

5.For purposes of financial analysis, an analyst should:

A)   always consider deferred tax liabilities as a liability.

B)   always consider deferred tax liabilities as stockholder's equity.

C)   determine the treatment of deferred tax liabilities on a case-by-case basis.

D)   always ignore deferred tax liabilities completely.

The correct answer was C)

For financial analysis, an analyst must decide on the appropriate treatment of deferred taxes on a case-by-case basis. These can be classified as liabilities or stockholder’s equity, depending on various factors. Sometimes, deferred taxes are just ignored altogether.