Question 36
Taxable income of a corporation
Correct Answer: differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination.

Question 37 Correct Answer: III

Question 38
Interperiod income tax allocation causes
Correct Answer: tax expense shown on the income statement to equal the amount of income taxes payable for the current year plus or minus the change in the deferred tax asset or liability balances for the year.

Question 39
The deferred tax expense is the
Correct Answer: increase in balance of deferred tax liability minus the increase in balance of deferred tax asset.

Question 40
The rationale for interperiod income tax allocation is to
Correct Answer: recognize a tax asset or liability for the tax consequences of temporary differences that exist at the balance sheet date.

Question 41
Interperiod tax allocation results in a deferred tax liability from
Correct Answer: the amount of deferred tax consequences attributed to temporary differences that result in net taxable amounts in future years.

Question 42
Which of the following situations would require interperiod income tax allocation procedures?
Correct Answer: A temporary difference exists at the balance sheet date because the tax basis of an asset or liability and its reported amount in the financial statements differ

Question 43
Interperiod income tax allocation procedures are appropriate when
Correct Answer: differences between net income for tax purposes and financial reporting occur because, even though financial accounting principles and tax laws concur on the item to be recognized as revenues and expenses, they don't concur on the timing of the recognition.

Question 44
Interperiod tax allocation would not be required when
Correct Answer: statutory (or