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    AFA Worksheet

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    anasfinkile
    1. The document provides a worksheet with questions about accounting for income taxes. It asks the reader to identify certain items as either permanent or temporary differences, and whether temporary differences create deferred tax assets or liabilities. It also contains multiple choice and computational questions about deferred tax assets and liabilities. 2. The worksheet tests the reader's understanding of temporary versus permanent differences between pretax financial income and taxable income. It also addresses how to calculate deferred tax balances and income taxes payable. 3. The questions cover topics such as depreciation methods, installment sales, fines, and prepaid/accrued revenues and expenses - exploring how they create temporary or permanent differences between book and taxable income.

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    AFA Worksheet

    Uploaded by

    anasfinkile
    25 views3 pages
    1. The document provides a worksheet with questions about accounting for income taxes. It asks the reader to identify certain items as either permanent or temporary differences, and whether temporary differences create deferred tax assets or liabilities. It also contains multiple choice and computational questions about deferred tax assets and liabilities. 2. The worksheet tests the reader's understanding of temporary versus permanent differences between pretax financial income and taxable income. It also addresses how to calculate deferred tax balances and income taxes payable. 3. The questions cover topics such as depreciation methods, installment sales, fines, and prepaid/accrued revenues and expenses - exploring how they create temporary or permanent differences between book and taxable income.

    Original Title

    AFA Worksheet (2)

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    1. The document provides a worksheet with questions about accounting for income taxes. It asks the reader to identify certain items as either permanent or temporary differences, and whether temporary differences create deferred tax assets or liabilities. It also contains multiple choice and computational questions about deferred tax assets and liabilities. 2. The worksheet tests the reader's understanding of temporary versus permanent differences between pretax financial income and taxable income. It also addresses how to calculate deferred tax balances and income taxes payable. 3. The questions cover topics such as depreciation methods, installment sales, fines, and prepaid/accrued revenues and expenses - exploring how they create temporary or permanent differences between book and taxable income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views3 pages

    AFA Worksheet

    Uploaded by

    anasfinkile
    1. The document provides a worksheet with questions about accounting for income taxes. It asks the reader to identify certain items as either permanent or temporary differences, and whether temporary differences create deferred tax assets or liabilities. It also contains multiple choice and computational questions about deferred tax assets and liabilities. 2. The worksheet tests the reader's understanding of temporary versus permanent differences between pretax financial income and taxable income. It also addresses how to calculate deferred tax balances and income taxes payable. 3. The questions cover topics such as depreciation methods, installment sales, fines, and prepaid/accrued revenues and expenses - exploring how they create temporary or permanent differences between book and taxable income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    AFA WORKSHEET

    1. Listed below are items that are treated differently for accounting purposes than they are
    for tax purposes. Indicate whether the items are permanent differences or temporary
    differences. For temporary differences, indicate whether they will create deferred tax
    assets or deferred tax liabilities.
    1. Investments accounted for by the equity method.
    2. Advance rental receipts.
    3. Fine for polluting.
    4. Estimated future warranty costs.
    5. Excess of contributions over pension expense.
    6. Expenses incurred in obtaining tax-exempt revenue.
    7. Installment sales.
    8. Excess tax depreciation over accounting depreciation
    9. Long-term construction contracts.
    10. Premiums paid on life insurance of officers (company is the beneficiary).
    2. Which of the following are temporary differences that are normally classified as expenses
    or losses that are deductible after they are recognized in financial income?
    A. Advance rental receipts.
    B. Product warranty liabilities.
    C. Depreciable property.
    D. Fines and expenses resulting from a violation of law.
    3. Which of the following is a temporary difference classified as a revenue or gain that is
    taxable after it is recognized in financial income?
    A. Subscriptions received in advance.
    B. Prepaid royalty received in advance.
    C. An installment sale accounted for on the accrual basis for financial reporting purposes
    and on the installment (cash) basis for tax purposes.
    D. Interest received on a municipal obligation.
    4. The deferred tax income is the
    A. Increase in balance of deferred tax asset minus the increase in balance of deferred tax
    liability.
    B. Increase in balance of deferred tax liability minus the increase in balance of deferred
    tax asset.
    C. Increase in balance of deferred tax asset plus the increase in balance of deferred tax
    liability.
    D. Decrease in balance of deferred tax asset minus the increase in balance of deferred tax
    liability.

    5. In 2020, Carla Corporation had pretax financial income of $172,000 and taxable income
    of $125,000. The difference is due to the use of different depreciation methods for tax
    and accounting purposes. The effective tax rate is 20%.Compute the amount to be
    reported as income taxes payable at December 31, 2020.
    6. The book basis of depreciable assets for Erwin Co. is $900,000, and the tax basis is
    $700,000 at the end of 2015. The enacted tax rate is 34% for all periods. Determine the
    amount of deferred taxes to be reported on the balance sheet at the end of 2015.
    7. What is the difference between a future taxable amount and a future deductible amount?
    8.

    9.
    10. Identify differences between pretax financial income and taxable income.
    11. Describe a temporary difference that results in future taxable amounts.
    12. Describe a temporary difference that results in future deductible amounts.
    13. Describe various temporary and permanent differences.

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