ACCT 370 Connect Smartbook Assignment 14 solutions complete answers

ACCT 370 Connect Smartbook Assignment 14 solutions complete answers 

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 per year. For tax purposes SYD is used with depreciation of $5,000 in 2021 and $4,000 in 2022. Depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 35% for 2021. The tax rate increased to 40% in 2022. The entry to record income tax for 2022 would include

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. The company uses SL depreciation for book purposes and SYD for tax purposes. Assume that depreciation is the only book-versus-tax difference. When the book-tax difference reverses in 2024, the journal entry will include

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. Which of the following statements is true?

 

Which of the following are true of book income?

 

The amount presented as an expense in the income statement for income taxes may be called all of the following except

 

An item that affects accounting income in one period but that affects taxable income in a different period is a

 

An item that causes book income to be more or less than taxable income initially is called a(n)       temporary difference.

 

An example of a temporary (timing) difference is

 

Which of the following are true of taxable income?

 

An item that enters into the determination of taxable income but that will never affect accounting income is called a       difference.

 

The current liability representing amounts owed to taxing authorities is called                  .

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. What is the deferred income tax payable at the end of 2021?

 

An item that will enter into accounting income but will never affect taxable income is a       difference.

 

The tax rate used to determine tax expense on the GAAP income statement is the       tax rate.

 

A revenue item that initially causes book income to be more than taxable income is a(n) ______ temporary difference and, in later periods, when that revenue item causes book income is less than taxable income, it is a(n) ______ temporary difference.

 

The effective tax rate is the

 

An example of a temporary difference is

 

The way of thinking about deferred taxes in which the focus is on matching recognition of income tax expense in the same period as the one in which the related pre-tax income is recognized is called the

 

An example of a permanent difference is

 

Under the balance sheet approach to deferred tax assets and liabilities, the primary analysis is on the             rather than the matching principle.

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. What is the originating timing difference?

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. How much will the company report as a deferred tax liability for 2021?

 

The tax rate for corporations set by law is the       tax rate.

 

The cumulative temporary differences between book and tax amounts for depreciation over the period depreciated

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. What is the effective tax rate for 2021?

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. Which of the following will be included in the journal entry for 2021?

 

The focus on matching recognition of income tax expense in the same period as the one in which the related pre-tax income was recognized is called the             approach.

 

Temporary differences that result in deferred tax assets are called             amounts.

 

The way of thinking about deferred taxes as the existence of deferred tax assets and liabilities is called the

 

Under current tax law, a net operating loss

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. How much will the company report as income tax expense for 2021?

 

Which of the following are true of a deferred tax asset valuation allowance?

 

The total of the differences between book and tax amounts for depreciation over the period depreciated is called the                   (Enter one word per blank)

 

Which of the following are true regarding valuation allowances?

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 40%. Which of the following will be included in the journal entry for 2024?

 

In the current year, Blankenship Corporation collected rent of $36,000. For income tax reporting, the rent is taxed when collected. For book purposes, the rent is recognized as income in the period earned. At the end of the current year, the unearned portion of the rent collected in the current year amounted to $4,000. Assume an income tax rate of 30%. The current year's income tax liability from the tax return is $10,000. The journal entry to record income taxes for the following year includes

 

Which of the following are true regarding a NOL carryforward?

 

Which of the following are true of valuation allowances?

 

A deferred tax asset valuation allowance

 

Which of the following are true for start-up companies with no history of profitability?

 

If a U.S. firm has a net deferred tax liability and its consolidated foreign subsidiary has a net deferred tax asset,

 

In the current year, Blankenship Corporation collected rent of $36,000. For income tax reporting, the rent is taxed when collected. For book purposes, the rent is recognized as income in the period earned. At the end of the current year, the unearned portion of the rent collected in the current year amounted to $4,000. Assume an income tax rate of 30%. The current year's income tax liability from the tax return is $8,000. The journal entry to record income taxes for the year includes

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 35% for 2021. The tax rate increased to 40% in 2022. The entry to record income tax for 2022 would include

 

Earning interest on municipal bonds

 

A stance expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities is a            .

 

Which of the following is true of the classification of deferred tax assets and liabilities?

 

Which of the following are the two steps in the process set out by GAAP to determine how much benefit may be recognized from an uncertain tax position and how much a firm should report in its tax contingency reserve as a liability?

 

Kensington Valley Corporation claimed a tax deduction of $10,000 which was uncertain when it was deducted in the current year. However, they are relatively certain of receiving the deduction over a five-year period. Their book income for the current year is $120,000 and they have a tax rate of 35%. Which of the following is true?

 

When the tax rate increases,

 

Permanent differences such as earning interest on municipal bonds

 

True or false: Because deferred tax assets and liabilities never reverse, we almost never see a deferred tax asset or liability balance of zero in a balance sheet.

 

A tax position includes each of the following except

 

Which of the following are true regarding the impact on a firm's cash flow?

 

Which of the following statements is true regarding an uncertain tax position?

 

Which of the following are true of the Tax Cuts and Jobs Act of 2017?

 

Harley Bean Corporation claimed a tax deduction of $5,000 which was uncertain when it was deducted in the current year. However, they are relatively certain of receiving the deduction over a five-year period. Their book income for the current year is $100,000 and they have a tax rate of 25%. Which of the following is true?

 

ASU 2018-02 permits firms to reclassify stranded tax effects from Accumulated Other Comprehensive Income to

 

Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 and $5,000 for tax purposes using the SYD method. Assume that depreciation is the only book-versus-tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 35% for 2021. The tax rate increased to 40% in 2022. Calculate the increase in the deferred tax liability for 2022.

 

The Tax Cuts and Jobs Act of 2017 did which of the following regarding foreign earnings?

 

Which of the following is the reason that we almost never see a deferred tax asset or liability balance of zero in a balance sheet?

 

Which of the following is not a change in the treatment of net operating losses under the Tax Cuts and Jobs Act of 2017?

 

The Tax Cuts and Jobs Act of 2017 imposed a limitation on the deductibility of interest for most businesses and that limitation is

 

The Tax Cuts and Jobs Act

 

Which of the following are true of the bonus depreciation expansion included in the Tax Cuts and Jobs Act of 2017?

 

ASU 2018-02 permits firms to reclassify       tax effects from AOCI to Retained earnings.

 

Which of the following are true of the Tax Cuts and Jobs Act of 2017 impact on the domestic production activities deduction?

 

The Tax Cuts and Jobs Act of 2017 imposed ______ on any income of foreign subsidiaries of U.S. companies that had not yet been taxed by the U.S. as of the end of the 2017 tax year because it had not yet been repatriated.

 

U.S. GAAP requires that the current and deferred portions of the current period's income tax provision

 

Which of the following are changes in the treatment of net operating losses under the Tax Cuts and Jobs Act of 2017?

 

Differences between the statutory tax rate and the effective tax rate are affected by which of the following?

 

The Tax Cuts and Jobs Act of 2017 allows interest expense in excess of the deduction limitation

 

Nondeductible fine and penalties cause book income to be ______ and the effective tax rate to be _____ than the statutory rate.

 

The Tax Cuts and Jobs Act of 2017 ______ the immediate expensing of certain capital expenditures.

 

True or false: State and local taxes are deductible for federal tax purposes.

 

The Tax Cuts and Jobs Act of 2017 ______ the domestic production activities deduction.

 

True or false: The Tax Cuts and Jobs Act of 2017 eliminated the need for foreign tax rate differentials as a reconciling item.

 

True or false: U.S. GAAP requires separate disclosure of the current and deferred portions of the current period's income tax provision.

 

Which of the following is a potential source of changes in deferred tax assets and liabilities that are not seen in the deferred tax provision?

 

Book tax expense divided by book pretax income results in the       tax rate.

 

Which of the following would be considered a potential sign of deteriorating earnings quality that should be investigated?

 

Interest on municipal bonds cause book income to be ______ and the effective tax rate to be _____ than the statutory rate.

 

Which of the following is true?

 

Which of the following is true of foreign tax rate differential?

 

Each of the following items should be shown as net of deferred tax effects except

 

True or false: All large, sudden changes in deferred tax balances should be investigated to help uncover deterioration in earnings quality.

 

Assume that Hamilton Corporation has pre-tax income of $100,000, tax expense of $22,500, and an after-tax income of $77,500. What is Hamilton's effective tax rate?

 

The differences between pre-tax income and taxable income are called