Subject: General Questions   / College life
Question
1. The tax base of revenue received in advance is equal to zero where the revenue received is taxed in the reporting period that the revenue is received.
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Chapter – Chapter 18 #1
Difficulty: Easy
Section: 18.02 Tax base of assets and liabilities, further consideration
2. Deferred tax assets are the amounts of income taxes recoverable in future periods that arise from assessable temporary differences.
Chapter – Chapter 18 #2
Difficulty: Easy
Section: 18.03 Deferred tax assets and deferred tax liabilities
3. Deferred tax assets may arise from amounts of income taxes recoverable in future periods that arise from carry forward of unused tax losses.
Chapter – Chapter 18 #3
Difficulty: Easy
Section: 18.04 Unused tax losses
4. The balance sheet approach compares the carrying value with the tax base of the assets and liabilities.
Chapter – Chapter 18 #4
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
5. Non-deductible expenses in the current or subsequent periods results in a deferred tax asset.
Chapter – Chapter 18 #5
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
6. The tax-effect of the temporary difference that arises from revaluation of non-current assets is recognised in profit and loss.
Chapter – Chapter 18 #6
Difficulty: Medium
Section: 18.05 Revaluation of non-current assets
7. It is possible for a firm to legally make a large accounting profit but pay little or no tax based on its taxable income.
Chapter – Chapter 18 #7
Difficulty: Easy
Section: Introduction to accounting for income taxes
8. Profit for taxation purposes is determined in accordance with AASB 112.
Chapter – Chapter 18 #8
Difficulty: Easy
Section: Introduction to accounting for income taxes
9. The difference between the carrying amount of an asset or liability in the balance sheet and its tax base is a temporary difference.
Chapter – Chapter 18 #9
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
10. There are two types of temporary differences between the carrying value of assets and liabilities and the tax base—assessable temporary differences and neutral temporary differences.
Chapter – Chapter 18 #10
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
11. The tax figure calculated and recorded on the statement of comprehensive income is an accurate reflection of the entity’s tax liability for the stated period.
Chapter – Chapter 18 #11
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
12. The balance sheet approach to accounting for taxation relies on comparing the historical cost of an item with its appropriate tax base.
Chapter – Chapter 18 #12
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
13. When the carrying amount of an asset exceeds its tax base, the amount that will be allowed as a deduction for tax purposes will exceed the amount of assessable economic benefits.
Chapter – Chapter 18 #13
Difficulty: Medium
Section: 18.01 The balance sheet approach to accounting for taxation
14. Under AASB 112, where the carrying amount of an asset is less than the amount that is economically recoverable, the deferred tax asset should be adjusted.
Chapter – Chapter 18 #14
Difficulty: Medium
Section: 18.02 Tax base of assets and liabilities, further consideration
15. According to AASB 112, with one exception, the tax base of a liability is to be determined in the following manner: Carrying amount – Future deductible amount + Future assessable amount.
Chapter – Chapter 18 #15
Difficulty: Easy
Section: 18.02 Tax base of assets and liabilities, further consideration
16. AASB 112 defines the tax base as the amount that is attributed to an asset or liability for tax purposes.
Chapter – Chapter 18 #16
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
17. Deferred tax assets arise as a result of tax losses. In Australia losses incurred in previous years can always be carried forward to offset taxable income derived in future years.
Chapter – Chapter 18 #17
Difficulty: Easy
Section: 18.04 Unused tax losses
18. When a non-current asset is revalued the tax base is not affected as depreciation for tax purposes will continue to be based on original cost.
Chapter – Chapter 18 #18
Difficulty: Easy
Section: 18.05 Revaluation of non-current assets
19. When a non-current asset is revalued, the recognition of future tax associated with an asset that has a fair value in excess of cost, acts to reduce the amount of the revaluation reserve.
Chapter – Chapter 18 #19
Difficulty: Easy
Section: 18.05 Revaluation of non-current assets
20. AASB 112 required an entity to offset current tax assets and current tax liabilities if the entity intends to realise the asset and settle the liability simultaneously.
Chapter – Chapter 18 #20
Difficulty: Medium
Section: 18.06 Offsetting deferred tax liabilities and deferred tax assets
21. A change in tax rates does not require any change in the carrying amount of deferred tax assets and deferred tax liabilities.
Chapter – Chapter 18 #21
Difficulty: Easy
Section: 18.07 Change of tax rates
22. AASB 112 uses what term to describe the method for accounting for taxes that it mandates?
A. net balances method
B. financial position method
C. asset and liability method
D. balance sheet method
Chapter – Chapter 18 #22
Difficulty: Easy
Section: Introduction to accounting for income taxes
23. The AASB 112 approach has been adopted because:
A. it matches the revenues earned with tax payable on those revenues.
B. it is conservative.
C. it is considered consistent with the AASB Conceptual Framework.
D. it is considered acceptable by the ATO.
Chapter – Chapter 18 #23
Difficulty: Easy
Section: Introduction to accounting for income taxes
24. The generally accepted (a) accounting rule and (b) tax rule for development expenditure are:
A. (a) capitalise and amortise; (b) a tax deduction when paid for.
B. (b) expense when paid for; (b) a tax deduction when paid for.
C. (c) capitalise and amortise; (b) a tax deduction when amortised.
D. (d) expense when paid for; (b) a tax deduction when amortised.
Chapter – Chapter 18 #24
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
25. The amount of tax assessed by the ATO based on the entity’s operations for the period will be reflected in which account?
A. income tax expense
B. deferred income tax
C. deferred tax liability
D. income tax payable
Chapter – Chapter 18 #25
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
26. Some items are treated as a deduction for tax purposes when they are paid but are recognised as expenses when they are accrued for accounting purposes. Which of the following items are of that type?
A. long-service leave
B. goodwill amortisation
C. depreciation
D. entertainment
Chapter – Chapter 18 #26
Difficulty: Medium
Section: 18.01 The balance sheet approach to accounting for taxation
27. Some items are typically not allowable tax deductions but are recognised as an expense for accounting purposes. Which of the following items are of that type?
A. research and development costs
B. warranty costs
C. sick leave payments
D. goodwill amortisation
Chapter – Chapter 18 #27
Difficulty: Medium
Section: 18.01 The balance sheet approach to accounting for taxation
28. The tax base is defined in AASB 112 as:
A. the amount of assessable income for the period.
B. the tax rate applicable to income levels under $60 000.
C. the amount that is attributed to an asset or liability for tax purposes.
D. the head office of the Australian Taxation Office in Canberra.
Chapter – Chapter 18 #28
Difficulty: Easy
Section: 18.01 The balance sheet approach to accounting for taxation
29. A taxable temporary difference is one that will result in:
A. an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
B. a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
C. an increase in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
D. a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled and an increase in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
Chapter – Chapter 18 #29
Difficulty: Medium
Section: 18.01 The balance sheet approach to accounting for taxation
30. A deductible temporary difference is one that will result in:
A. a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
B. an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
C. a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled, and an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
D. a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
Chapter – Chapter 18 #30
Difficulty: Medium
