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CHAPTER 19 ACCOUNTING FOR INCOME TAXES - IFRS QUESTIONS

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IFRS QUESTIONS;True/False Questions;1. Under iGAAP an affirmative judgment approach is used for recognizing deferred tax assets by recognizing assets up to the amount that is probable to be realized.;2. Under U.S. GAAP, the rate used to compute deferred taxes is either the enacted tax rate, or a substantially enacted tax rate (virtually certain).;3. Under iGAAP, a deferred tax liability is classified as current or noncurrent based on the classification of the asset or liability to which it relates.;4. Under iGAAP, all tax effects are charged or credited to income.;5. Under iGAAP, all potential liabilities associated with uncertain tax positions are recognized.;Multiple Choice Questions;1. Which of the following is false regarding accounting for deferred taxes under iGAAP?;a. A deferred tax liability is classified as current or noncurrent based on the classification of the asset or liability to which it relates.;b. A deferred tax asset is recognized up to the amount that is probable to be realized.;c. Tax effects of certain items are recognized in equity.;d. The rate used to compute deferred taxes is either the enacted tax rate, or a substantially enacted tax rate (virtually certain).;2. Jerome Co. has the following deferred tax liabilities at December 31, 2010;Amount;Related to;$100,000;Installment sales, expected to be collected in 2011;$250,000;Fixed asset, 10-year remaining useful life, 2010 tax depreciation exceeds book depreciation;$90,000;Prepaid insurance related to 2011;What amount would Jerome Co. report as a noncurrent deferred tax liability under iGAAP and under U.S. GAAP?;iGAAP U.S. GAAP;a. $0 $350,000;b. $440,000 $250,000;c. $250,000 $250,000;d. $440,000 $440,000;3. With regard to recognition of deferred tax assets, iGAAP requires;Approach;Recognition;a.;Affirmative judgment;Recognize an asset up to the amount that is probable to be realized;b.;Impairment approach;Recognize asset in full, reduced by valuation allowance if it?s more likely than not that all or a portion of the asset won?t be realized;c.;Affirmative judgment;Recognize asset in full, reduced by valuation allowance if it?s more likely than not that all or a portion of the asset won?t be realized;d.;Impairment approach;Recognize an asset up to the amount that is probable to be realized;4. Match the approach, iGAAP or U.S. GAAP, with the location where tax effects are reported;Approach;Location;a.;iGAAP;Charge or credit only taxable temporary differences to income;b.;U.S. GAAP;Charge or credit certain tax effects to equity;c.;iGAAP;Charge or credit certain tax effects to equity;d.;U.S. GAAP;Charge or credit only deductible temporary differences to income;5. Alice, Inc. has the following deferred tax assets at December 31, 2010;Amount;Related to;$60,000;Rent revenue collected in advance related to 2011;$25,000;Warranty liability, expected to be paid in 2011;$85,000;Accrued liability related to a lawsuit expected to settle in 2014;What amount would Alice, Inc. report as a current deferred tax asset under iGAAP and under U.S. GAAP?;iGAAP_ U.S. GAAP;a $170,000 $170,000;b. $0 $85,000;c. $85,000 $170,000;d. $170,000 $85,000;Short Answer;1. Breifly describe some of the similarities and differences between U.S. GAAP and iGAAP with respect to income tax accounting.;Describe the current convergence efforts of the FASB and IASB in the area of accounting for taxes.

 

Paper#35558 | Written in 18-Jul-2015

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