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Fill in the blanks statements about deferred income tax, timing differences, and valuation.

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) pretax financial income.

B) If a $76,000 balance in Deferred Tax Asset was computed by use of a 40% rate, the underlying cumulative temporary difference amounts to $_____________.

C) Deferred taxes ________ (are, are not) recorded to account for permanent differences.

D) If a taxable temporary difference originates in 2008, it will cause taxable income for 2008 to be _____ (less than, greater than) pretax financial income for 2008.

E) If total tax expense is $50,000 and deferred tax expense is $65,000, then the current portion of the expense computation is referred to as current tax ________ (expense, benefit) of $__________.

F) 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 in 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? _________

G) An increase in the Deferred Tax Liability account on the balance sheet is recorded by a _______ (debit, credit) to the Income Tax Expense account.

H) An income statement that reports current tax expense of $82,000 and deferred tax benefit for $23,000 will report total income tax expense of $_______________.

I) A valuation account is needed whenever it is judged to be ______ that a portion of a deferred tax asset _________ (will be, will not be) realized.

J) 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 deferred tax _________ (expense, benefit).

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(a) greater than
(b) $190,000 = ($76,000 divided by 40%)
(c) are not ...

Solution Summary

The solution identifies the blanks relating to deferred income tax, timing differences, and valuation. This solution is answers only.