Which of the following statements concerning when a company announces it is discontinuing a business segment is FALSE? a. Past income statements must be restated, separating the income or loss from the discontinued operations. b. Any expected gain on the disposal is reported in the year of the announcement. c. The income or loss from the discontinued operations is reported separately. d. Income and losses from discontinued operations are reported net of tax after net income from continuing operations.
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- A debit balance appearing on the trial balance as taxation has been identified as the under-provision for tax relating to the previous year’s profit. This amount should be included in the current year’s financial statements of a company as: part of administrative expenses in the Statement of income or a deduction from the sub-total of Equity and reserves on the Statement of financial position or part of the tax expense reported in the current year’s Statement of income or a deduction from Retained Earnings brought forward, in the Statement of changes in Equity.If the income statement error is discovered in a subsequent accounting period, what action is to be done by the entity? Group of answer choices a. Reclassify the item to its proper nominal account and restate the income statement of the prior year affected by the error. b. Restate the income statement of the prior year affected by the error. c. No reclassifying entry is necessary but restate the income statement of the prior year affected by the error. d. Reclassify the item to its proper nominal account. Recording of next year's sales as sales of the current year will Group of answer choices a. overstate net income of next year b. not affect retained earnings at the end of next year c. understate retained earnings at the end of the current year d. understate net income of the current yearWhat is the accounting treatment for discontinued operations? A : It is reported at its gross amount as an "other revenue or gain" or "other expense or loss". B : It is reported as an "other revenue or gain" or "other expense and loss", net of tax. C : It only needs to be disclosed in the footnotes of the financial statements. D : It may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).
- 8.All of the following components are shown in the income statement net of applicable income taxes EXCEPT Group of answer choices A.cumulative effect of a change in accounting principle. B.extraordinary gain or loss. C.discontinued operations. D.gain or loss on sale of plant assets.Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification. A. Non-deductible expenses B. Non-taxable revenues C. Deductible temporary difference D. Taxable temporary difference Collections of rental in excess of rent revenue reported during the period. Dividends received by a domestic corporation from a domestic corporation. Increase in fair value of equity investments measured at fair value through profit or loss. Uncollectible accounts expense in excess of accounts written off during the period. Tax depreciation in excess of depreciation for accounting purposes.Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification. A. Non-deductible expenses B. Non-taxable revenues C. Deductible temporary difference D. Taxable temporary difference Collections of rental in excess of rent revenue reported during the period. Dividends received by a domestic corporation from a domestic corporation. Increase in fair value of equity investments measured at fair value through profit or loss.
- A company changes from the straight-line method to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change will include a O credit to ACcumulated Depreciation. O debit to Retained Earnings in the amount of the difference on prior years. O debit to Deferred Tax Asset. O credit to Deferred Tax Liability.No deferred tax asset was recognized in the Year 1 financial statements by the Chaise Company when a loss from discontinued segments was carried forward for tax purposes. Chaise had no temporary differences. The tax benefit of the loss carried forward reduced current taxes payable on Year 2 continuing operations.The Year 2 financial statements would include the tax benefit from the loss brought forward in Gain or loss from discontinued segments. Income from continuing operations. Cumulative effect of accounting changes. Owners' equity.A company records an unrealized profit on short-term securities. This would result in what type of difference and in what type of deferred income tax? Type of Difference /deferred tax Select one: a.Permanent / Liability B.Temporary / Liability c.Temporary / Asset d.Permanent / Asset
- Refund of value added taxes in the current year which were erroneously paid in a prior year is generally Subject to final income tax Included in gross income O Not included in gross income O Deducted from retained earnings1. Which of the following statements is incorrect regarding deferred taxes? a. Income tax payable plus or minus the change in deferred income taxes equals total income tax expense. b. The deferred portion of income tax expense is the amount of change in deferred taxes related to the current period. c. In computing income tax expense, a company deducts an increase in a deferred tax liability to income tax payable. d. All of the choices are incorrect. 2. A liability in 2021 is reported for financial reporting purposes but not for tax purposes. When this liability is settled in 2022, a future taxable amount will: a. pretax financial income will exceed taxable income in 2022. b. the Company will record a decrease in a deferred tax liability in 2022. c. total income tax expense for 2022 will exceed current tax expense for 2022. d. will not be affected. 3. Assuming a 35% statutory tax rate applies to all years involved, which of the following situations will give rise to reporting a…Which of the following is deducted from the financial income in computing for the taxable income? Excess of accounting depreciation from the allowed tax deduction Donations received during the year Penalties paid for late filing of tax returns Unrealized losses from FA@FVTOCI