Question 1

In jurisdictions where the impairment of goodwill is not tax deductible,AASB 112 Income Taxes:

Accepted Answer

A) requires that any deferred tax items for goodwill be capitalised in the carrying amount of goodwill. 
B) requires that any deferred tax items in relation to goodwill be recognised directly in equity. 
C) does not permit the application of deferred tax accounting to goodwill. 
D) allows the recognition of a deferred tax item in relation to goodwill. 
A) requires that any deferred tax items for goodwill be capitalised in the carrying amount of goodwill. 
B) requires that any deferred tax items in relation to goodwill be recognised directly in equity. 
C) does not permit the application of deferred tax accounting to goodwill. 
D) allows the recognition of a deferred tax item in relation to goodwill. C

Question 2

Jackson Limited had the following deferred tax balances at reporting date:
$\triangleright$deferred tax assets $10 000
$\triangleright$deferred tax liabilities $26 000.
Effective from the first day of the next financial period,the company rate of income tax was reduced from 40% to 30%.The adjustment to income tax expense to recognise the impact of the tax rate change is:

Accepted Answer

A) Cr $4000. 
B) Cr $5333. 
C) Dr $4000. 
D) Dr $5333. 
A) Cr $4000. 
B) Cr $5333. 
C) Dr $4000. 
D) Dr $5333. A

Question 3

The entries for income tax for the period are comprised of three components.Which of the following is NOT included in the components?

Accepted Answer

A) Recognition of the current tax liability. 
B) Recognition of the movement in deferred tax liability included in the profit or loss for the period. 
C) Recognition of the temporary difference on the purchase of goodwill. 
D) Recognition of the movement in deferred tax asset included in the profit or loss for the period. 
A) Recognition of the current tax liability. 
B) Recognition of the movement in deferred tax liability included in the profit or loss for the period. 
C) Recognition of the temporary difference on the purchase of goodwill. 
D) Recognition of the movement in deferred tax asset included in the profit or loss for the period. C

Question 4

The recognition of __________ provides more complete or relevant information for economic decision making than __________ .

Accepted Answer

A) current tax and deferred tax; deferred tax alone 
B) current tax and deferred tax; current tax alone 
C) deferred tax alone; current tax and deferred tax combined 
D) current tax alone; current tax and deferred tax combined 
A) current tax and deferred tax; deferred tax alone 
B) current tax and deferred tax; current tax alone 
C) deferred tax alone; current tax and deferred tax combined 
D) current tax alone; current tax and deferred tax combined

Question 5

Under AASB 112 Incomes Taxes,deferred tax assets and liabilities are measured at the tax rates that:

Accepted Answer

A) are expected to apply when the asset is realised or the liability is settled. 
B) applied at the beginning of the reporting period. 
C) applied at the end of the reporting period. 
D) prevail at the reporting date. 
A) are expected to apply when the asset is realised or the liability is settled. 
B) applied at the beginning of the reporting period. 
C) applied at the end of the reporting period. 
D) prevail at the reporting date.

Question 6

CTV Limited has an asset which cost $400 and against which depreciation of $200 has accumulated.The accumulated depreciation for tax purposes is $280 and the company tax rate is 30%.The tax base of this asset is:

Accepted Answer

A) $36. 
B) $320. 
C) $120. 
D) $80. 
A) $36. 
B) $320. 
C) $120. 
D) $80.

Question 7

Unless a company has a legal right of set-off,AASB 112 Income Taxes,requires disclosure of which of the following information for deferred tax statement of financial position items?
I.The amount of deferred tax assets recognised.
II.The amount of the deferred tax liabilities recognised.
III.The net amount of the deferred tax assets and liabilities recognised.
IV.The amount of the deferred tax asset relating to tax losses.

Accepted Answer

A) I,II and IV only 
B) I,II and III only 
C) III and IV only 
D) IV only 
A) I,II and IV only 
B) I,II and III only 
C) III and IV only 
D) IV only

Question 8

Sydney Limited accrued $20 000 for employees' long service leave in the year ended 30 June 2015.This item will not be tax deductible until it is paid in approximately 10 years' time.If the company tax rate is 30%,Sydney Limited must record which of the following tax effects as a balance date adjustment?

Accepted Answer

A) Dr Deferred tax asset $6000 
B) Cr Deferred tax asset $6000 
C) Dr Deferred tax liability $6000 
D) Cr Deferred tax liability $6000 
A) Dr Deferred tax asset $6000 
B) Cr Deferred tax asset $6000 
C) Dr Deferred tax liability $6000 
D) Cr Deferred tax liability $6000

Question 9

Deferred tax accounting adjustments are recorded at what point in time?

Accepted Answer

A) As each transaction arises or is incurred 
B) As the cash flows from each transaction occur 
C) At the end of each month 
D) At balance date 
A) As each transaction arises or is incurred 
B) As the cash flows from each transaction occur 
C) At the end of each month 
D) At balance date

Question 10

The following information was extracted from the financial records of Panda Limited: equipment purchased on 1 July 2014 for $140 000 (accounting depreciation 10% straight line; tax depreciation 20% straight line).If the company tax rate is 30%,the deferred tax item that will be recorded by Panda Limited at 30 June 2015 is which of the following?

Accepted Answer

A) Dr Deferred tax asset $14 000 
B) Cr Deferred tax asset $4200 
C) Dr Deferred tax liability $14 000 
D) Cr Deferred tax liability $4200 
A) Dr Deferred tax asset $14 000 
B) Cr Deferred tax asset $4200 
C) Dr Deferred tax liability $14 000 
D) Cr Deferred tax liability $4200

Question 11

Silver Bullet Limited has a product warranty liability amounting to $12 000.The product warranty costs are not tax deductible until paid out to customers.The company tax rate is 30%.The company has a:

Accepted Answer

A) tax base of $12 000. 
B) future deductible amount of $0. 
C) taxable temporary difference of $12 000. 
D) deductible temporary difference of $12 000. 
A) tax base of $12 000. 
B) future deductible amount of $0. 
C) taxable temporary difference of $12 000. 
D) deductible temporary difference of $12 000.

Question 12

Tax losses can be viewed as providing:

Accepted Answer

A) taxable temporary differences,and therefore a current tax liability. 
B) taxable temporary differences,and therefore a current tax refund. 
C) deductible temporary differences,and therefore a deferred tax asset. 
D) deductible temporary differences,and therefore deferred tax liabilities. 
A) taxable temporary differences,and therefore a current tax liability. 
B) taxable temporary differences,and therefore a current tax refund. 
C) deductible temporary differences,and therefore a deferred tax asset. 
D) deductible temporary differences,and therefore deferred tax liabilities.

Question 13

On 1 April 2015,the company rate of income tax changed from 35% to 30%.At the previous reporting date (30 June 2014)Monty Limited had the following tax balances:
$\triangleright$deferred tax assets $20 250
$\triangleright$deferred tax liabilities $15 000.
What is the impact of the tax rate change on income tax expense?

Accepted Answer

A) Increase $750 
B) Decrease $750 
C) Increase $875 
D) Decrease $875 
A) Increase $750 
B) Decrease $750 
C) Increase $875 
D) Decrease $875

Question 14

A deductible temporary difference is expected to lead to the payment of:

Accepted Answer

A) less tax in the future and gives rise to a deferred tax asset. 
B) more tax in the future and gives rise to a deferred tax asset. 
C) less tax in the future and gives rise to a deferred tax liability. 
D) more tax in the future and gives rise to a deferred tax liability. 
A) less tax in the future and gives rise to a deferred tax asset. 
B) more tax in the future and gives rise to a deferred tax asset. 
C) less tax in the future and gives rise to a deferred tax liability. 
D) more tax in the future and gives rise to a deferred tax liability.

Question 15

Generally,when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on:

Accepted Answer

A) cash flows. 
B) the income tax legislation. 
C) cash flows adjusted for depreciation charges. 
D) accrual accounting and is subject to the requirements of accounting standards. 
A) cash flows. 
B) the income tax legislation. 
C) cash flows adjusted for depreciation charges. 
D) accrual accounting and is subject to the requirements of accounting standards.

Question 16

A taxable temporary difference is expected to lead to the payment of:

Accepted Answer

A) less tax in the future and gives rise to a deferred tax asset. 
B) more tax in the future and gives rise to a deferred tax asset. 
C) less tax in the future and gives rise to a deferred tax liability. 
D) more tax in the future and gives rise to a deferred tax liability. 
A) less tax in the future and gives rise to a deferred tax asset. 
B) more tax in the future and gives rise to a deferred tax asset. 
C) less tax in the future and gives rise to a deferred tax liability. 
D) more tax in the future and gives rise to a deferred tax liability.

Question 17

The tax expense related to profit or loss of the period is required to be presented:

Accepted Answer

A) on the face of the statement of financial position. 
B) on the face of the statement of profit or loss and other comprehensive income. 
C) in the statement of cash flows. 
D) in the statement of changes in equity. 
A) on the face of the statement of financial position. 
B) on the face of the statement of profit or loss and other comprehensive income. 
C) in the statement of cash flows. 
D) in the statement of changes in equity.

Question 18

Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting,and the tax bases of those net assets determined under the Income Tax Assessment Act,are described as:

Accepted Answer

A) tax losses. 
B) temporary differences. 
C) permanent differences. 
D) the current income tax liability. 
A) tax losses. 
B) temporary differences. 
C) permanent differences. 
D) the current income tax liability.

In jurisdictions where the impairment of goodwill is not tax deductible,AASB 112 Income Taxes:

The entries for income tax for the period are comprised of three components.Which of the following is NOT included in the components?

The recognition of provides more complete or relevant information for economic decision making than .

Under AASB 112 Incomes Taxes,deferred tax assets and liabilities are measured at the tax rates that:

CTV Limited has an asset which cost $400 and against which depreciation of $200 has accumulated.The accumulated depreciation for tax purposes is $280 and the company tax rate is 30%.The tax base of this asset is:

Deferred tax accounting adjustments are recorded at what point in time?

Silver Bullet Limited has a product warranty liability amounting to $12 000.The product warranty costs are not tax deductible until paid out to customers.The company tax rate is 30%.The company has a:

Tax losses can be viewed as providing:

A deductible temporary difference is expected to lead to the payment of:

Generally,when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on:

A taxable temporary difference is expected to lead to the payment of:

The tax expense related to profit or loss of the period is required to be presented:

Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting,and the tax bases of those net assets determined under the Income Tax Assessment Act,are described as:

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Financial Instruments

Foreign Currency Transactions and Forward Exchange Contracts

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Disclosure: Translation of Financial Statements Into a Presentation Currency

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Investments in Joint Arrangements

Insolvency and Liquidation

Filters

Exam 6: Accounting for Company Income Tax

In jurisdictions where the impairment of goodwill is not tax deductible,AASB 112 Income Taxes:

The entries for income tax for the period are comprised of three components.Which of the following is NOT included in the components?

The recognition of __________ provides more complete or relevant information for economic decision making than __________ .

Under AASB 112 Incomes Taxes,deferred tax assets and liabilities are measured at the tax rates that:

CTV Limited has an asset which cost $400 and against which depreciation of $200 has accumulated.The accumulated depreciation for tax purposes is $280 and the company tax rate is 30%.The tax base of this asset is:

Deferred tax accounting adjustments are recorded at what point in time?

Silver Bullet Limited has a product warranty liability amounting to $12 000.The product warranty costs are not tax deductible until paid out to customers.The company tax rate is 30%.The company has a:

Tax losses can be viewed as providing:

A deductible temporary difference is expected to lead to the payment of:

Generally,when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on:

A taxable temporary difference is expected to lead to the payment of:

The tax expense related to profit or loss of the period is required to be presented:

Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting,and the tax bases of those net assets determined under the Income Tax Assessment Act,are described as:

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Financial Instruments

Foreign Currency Transactions and Forward Exchange Contracts

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Disclosure: Translation of Financial Statements Into a Presentation Currency

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Investments in Joint Arrangements

Insolvency and Liquidation

Filters

The recognition of provides more complete or relevant information for economic decision making than .