Income Tax and Deferred Tax Quiz
7 multiple-choice questions with answers and explanations · 7 hard
Current tax, temporary differences, and deferred tax assets and liabilities.
- 1Deferred Tax on a Retrospective Policy ChangeAdopting FIFO retrospectively increases opening inventory by $10,000. The tax rate is 25% and the tax base of inventory is unchanged. The credit to opening Retained Earnings is:hard
- 2IAS 12 — Deferred Tax on Accelerated DepreciationAn asset's carrying amount is $80,000 but its tax base is $60,000 because tax depreciation is faster. With a 25% tax rate, the entity recognizes:hard
- 3IAS 12 — Deferred Tax Asset from Tax LossesA company has unused tax losses to carry forward. Under IAS 12 it recognizes a deferred tax asset:hard
- 4IAS 7 — Classifying Income Taxes PaidUnder IAS 7, cash payments of income taxes are classified as:hard
- 5Deferred Tax Liability from Accelerated DepreciationA company's tax depreciation exceeds its accounting depreciation by $50,000 this year, and the tax rate is 25%. This temporary difference creates:hard
- 6Remeasuring Deferred Tax After a Rate ChangeA company carries a deferred tax liability of $40,000, calculated using a 20% tax rate. Before the reporting date, the government enacts a change in the tax rate to 25%. The deferred tax liability should be:hard
- 7US GAAP: Classifying Deferred Tax on the Balance SheetUnder current US GAAP, deferred tax assets and liabilities are presented on a classified balance sheet as:hard