Q1. Christophe Inc. is an electronics manufacturing firm. It owns equipment with a tax basis of $800,000 and a carrying value of $600,000 as the result an impairment charge. It also has a tax loss carryforward of $300,000 that is expected to be utilized within the next year or two. The tax rate on these items is 40% but the tax rate is expected to decrease to 35% for the foreseeable future. Which of the following amounts is closest to the net effect of the change in tax rate on the income statement? A) Increase in deferred tax expense of $5,000. B) Increase in deferred tax expense of $25,000. C) Decrease in deferred tax expense of $5,000.
Q2. Habel Inc. owns equipment with a tax base of $400,000 and a carrying value of $600,000. Habel also has a tax loss carryforward of $200,000 that is expected to be utilized in the foreseeable future. Deferred tax items on the balance sheet are valued based on a tax rate of 30%. If the tax rate is expected to increase to 35%, the adjustments to the value of deferred tax items will most likely cause Habel’s total liabilities-to-equity ratio to: A) decrease. B) increase. C) remain unchanged.
Q3. Firm 1 has a deferred tax liability and Firm 2 has a deferred tax asset. With respect to the taxes payable for each firm when these deferred tax items reverse, a decrease in the firms’ tax rates will lead to: Firm 1 Firm 2
A) Lower taxes payable Higher taxes payable B) Lower taxes payable Lower taxes payable C) Higher taxes payable Lower taxes payable
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发表于 2009-1-19 10:58
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