Q1. Permanent differences in taxable and pretax income: A) are considered as changes in the effective tax rate. B) are reported on both tax returns and financial statements. C) can be deferred in some cases.
Q2. Which of the following statements regarding differences in taxable and pretax income is TRUE? Differences in taxable and pretax income that: A) result in deferred taxes are called temporary differences. B) increase or reduce the effective tax rate are called temporary differences. C) are not reversed for five or more years are called permanent differences.
Q3. Which of the following statements about deferred taxes is least accurate? Deferred taxes: A) arise primarily due to differences between GAAP and IRS code. B) may never “reverse” in the case of companies that are growing. C) can relate to either permanent or temporary differences.
Q4. Enduring Corp. operates in a country where net income from sales of goods are taxed at 40%, net gains from sales of investments are taxed at 20%, and net gains from sales of used equipment are exempt from tax. Installment sale revenues are taxed upon receipt. For the year ended December 31, 2004, Enduring recorded the following before taxes were considered: - Net income from the sale of goods was $2,000,000, half was received in 2004 and half will be received in 2005.
- Net gains from the sale of investments were $4,000,000, of which 25% was received in 2004 and the balance will be received in the 3 following years.
- Net gains from the sale of equipment were $1,000,000, of which 50% was received in 2004 and 50% in 2005.
On its financial statements for the year ended December 31, 2004, Enduring should apply an effective tax rate of: A) 22.86% and increase its deferred tax liability by $1,000,000. B) 22.86% and increase its deferred tax asset by $1,000,000. C) 26.67% and increase its deferred tax liability by $1,000,000.
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发表于 2009-1-19 10:59
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