ĐỀ 3

1. The deferred tax expense is the

a. decrease in balance of deferred tax asset minus the increase in balance of

deferred tax liability

b. increase in balance of deferred tax asset minus the increase in balance of

deferred tax liability

c. increase in balance of deferred tax asset plus the increase in balance of deferred
tax liability

d. increase in balance of deferred tax liability minus the increase in balance of

deferred tax asset

2. ABC Limited has an asset with a carrying value of €50,000. The tax base of
this asset is €40,000. The tax rate is 30%. As a result, which of the following
deferred tax items does Roland Limited have?

a. A deferred tax asset of €3,000

b. A deferred tax liability of €10,000

c. All are incorrect

d. A deferred tax liability of €3,000

e. A deferred tax asset of €10,000

3. Under IAS 12 Incomes Taxes, deferred tax assets and liabilities are
measured at the

a. applied at the beginning of the reporting period

b. at the end of the reporting period

c. at the rates that prevail at the reporting date

d. are expected to apply when the asset is realised or the liability is settled

4. At what point in time are deferred tax accounting adjustments recorded?

a. At the reporting date

b. At the end of each month

c. As the cash flows from each transaction occur

d. As each transaction arises or is incurred

5. A difference between the amounts of the accounting expenses and the tax
deductions of a company which will be reversed in future periods indicates:

a. a temporary difference

b. a greater annual income tax expense

C. a permanent difference

d. unethical accounting practices

6. Jordyn Ltd acquired land in 20X9 for a cash payment of $240,000. In

20x11, Jordyn Ltd revalued that land to $340,000. If the company income tax
rate is 30%, the following entry should be made:

a. Dr Revaluation Reserve $30,000; Cr Deferred Tax Asset $30,000

b. No entry is required

c. Dr Revaluation Surplus $30,000; Cr Deferred Tax Liability $30,000

d. Dr Land $30,000; Cr Deferred Tax Liability $30,000;

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

a. less tax in the future and gives rise to a deferred tax liability

b. less tax in the future and gives rise to a deferred tax asset

C. more tax in the future and gives rise to a deferred tax asset

d. more tax in the future and gives rise to a deferred tax liability
8. On 1 April 20x5, the company rate of income tax was changed from 35% to
30%. At the previous reporting date (30 June 20x4) Montgomery Limited had
the following tax balances: Deferred tax assets: $26,250; Deferred tax
liabilities: $21,000. What is the impact of the tax rate change on income tax
expense?

a. increase $875

b. decrease $875

c. increase $750

d. All are incorrect

e. decrease $750X

9. Current tax consequences of business operations give rise to:

a. a current liability for income tax payable

b. a contingent liability for taxes payable

C. a non-current liability for taxes payable

d. a deferred liability for income tax payable

10. Which of the following will not result in a temporary difference?

a. Advance rental receipts

b. Gain on involuntary conversion of non-monetary asset

c. All of these ANSWER choices will result in a temporary difference

d. Product warranty liabilities

11. An example of a permanent difference is:

a. percentage depletion of natural resources

b. interest expense on money borrowed to invest in government bonds

c. All of these ANSWER choices are correct

d. fines resulting from a violation of law

12. When assessing the probability that a deferred tax asset from a tax loss
can be recognised an entity should consider:

a. whether tax planning opportunities are available to the entity that will create
sufficient future taxable profits to recover the tax losses

b. whether it is guaranteed that the entity will have future taxable profits before the
X tax losses expire

C. whether the unused tax losses result from identifiable causes which are likely to
recur

d. whether the entity has sufficient deductible temporary differences which will
result in taxable amounts in future so that the tax losses can be used

13. Link Sink Manufacturing has a deferred tax asset account with a balance
of £300,000 at the end of 2018 due to a single cumulative temporary difference
of £750,000. At the end of 2019, this same temporary difference has increased
to a cumulative amount of £1,000,000. Taxable income for 2019 is £1,700,000.
The tax rate is 40% for 2019, but enacted tax rates for all future years are
35%. Assuming it's probable that 70% of the deferred tax asset will be
realized, what amount will be reported on Link Sink's statement of financial
position for the deferred tax asset at December 31, 2019?

a. £245,000

b. All are incorrect

C. £262,500

d. £280,000

e. £595,000

14. A major distinction between temporary and permanent differences is:

a. permanent differences are not representative of acceptable accounting practice

b. temporary differences reverse themselves in subsequent accounting periods,
whereas permanent differences do not reverse

c. once an item is determined to be a temporary difference, it maintains that status;

however, a permanent difference can change in status with the passage of time

d. temporary differences occur frequently, whereas permanent differences occur

only once

15. Empirical research on whether tax-effect accounting should continue to be

applied indicates that:

a. share prices are unrelated to either accounting or taxation income

b. share prices are equally associated with both accounting and taxable income,
and therefore both accounting and taxation income should be reported in the
financial reports

c. share prices are more highly associated with accounting income, and therefore
accounting standards should not be changed

d. share prices are more highly associated with taxable income, and therefore
financial reports should conform to the taxation treatments

16. When a change in the tax rate is enacted into law, its effect on existing
deferred income tax accounts should be:

a. considered, but it should only be recorded in the accounts if it reduces a deferred

tax liability or increases a deferred tax asset

b. applied to all temporary or permanent differences that arise prior to the date of
the enactment of the tax rate change, but not subsequent to the date of the change

c. reported as an adjustment to tax expense in the period of change

d. handled retroactively in accordance with the guidance related to changes in

accounting standards