Question

Complete the following statements by filling in the blanks.
(a) In a period in which a taxable temporary difference reverses, the reversal will cause taxable income to be ___________ (less than/greater than) accounting income.
(b) In a period in which a deductible temporary difference reverses, the reversal will cause taxable income to be ___________ (less than/greater than) accounting income.
(c) If a $76,000 balance in the Future Tax Asset account were calculated using a 40% rate, the underlying temporary difference would amount to $___________.
(d) Future taxes (are/are not) recorded to account for permanent differences.
(e) If a taxable temporary difference originates in 2011, it causes taxable income of 2011 to be ___________ (less than/greater than) accounting income for 2011.
(f) If total tax expense is $50,000 and future tax expense is $65,000, then the current portion of the expense is referred to as a current tax ___________ (expense/benefit) of $___________.
(g) If a corporation’s tax return shows taxable income of $100,000 for Year 2 and a tax rate of 40%, how much will appear on the December 31, Year 2 balance sheet for “Income tax payable” if the company has made estimated tax payments of $36,500 for Year 2? $___________
(h) An increase in the Future Tax Liability account on the balance sheet is recorded by a ___________ (debit/credit) to the Future Income Tax Expense account.
(i) An income statement that reports current tax expense of $82,000 and a future tax benefit of $23,000 will report total income tax expense of $___________.
(j) A valuation account may be used whenever it is judged to be more likely than not that a portion of a future tax asset ___________ (will be/will not be) realized.
(k) If the tax return shows total taxes due for the period of $75,000 but the income statement shows total income tax expense of $55,000, the difference of $20,000 is referred to as a future tax ___________ (expense/benefit).
(l) If a company’s income tax rate increases, the effect will be to ___________ (increase/decrease) the amount of a future tax liability and _______ (increase/decrease) the amount of a future tax asset.
(m) The difference between the tax basis of an asset or liability and its carrying amount is called a ___________ difference. Differences between accounting income and taxable income that will reverse in the future are called ___________ differences.


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  • CreatedAugust 23, 2015
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