Question 1. 1. (TCO B) As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of Noor Co.'s sole depreciable asset, acquired in Year 1, exceeded its tax basis by $250,000 at December 31, Year 1. This difference will reverse in future years. The enacted tax rate is 30% for Year 1, and 40% for future years. Noor has no other temporary differences. In its December 31, Year 1, balance sheet, how should Noor report the deferred tax effect of this difference? (Points : 8) |
As an asset of $75,000.
As an asset of $100,000.
As a liability of $75,000.
-----> As a liability of $100,000. Answer
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has temporary taxable differences that will reverse during the next year and add to taxable income. These differences relate to noncurrent assets. Under U.S. GAAP, deferred income taxes based on these temporary differences should be classified in Hut's balance sheet as a: (Points : 8) |
-------> Noncurrent liability. Answer
Question 4. 4. (TCO B) Venus Corp.'s worksheet for calculating current and deferred income taxes for Year 1 follows:
Year 1 Year 2 Year 3
Pretax income $1,400
Depreciation (800) (1,200) $ 2,000
Warranty costs 400 (100) (300)
Taxable income $ 1,000 (1,300) 1,700
Loss carryback (1,000) 1,000
Loss carryforward ...