1. In early 2013, Virgin Atlantic must pay the tax authority $45,000 on the income it earned in 2012. This amount was reported on the company’s financial statements as of 31 December 2012 as:

A. income tax expense.
B. a deferred tax liability.
C. taxes payable.

 

2. What does the change in valuation allowance for deferred tax assets indicate over the period of three years from 2010-2012?

A. increased prospects for future profitability.
B. decreased prospects for future profitability.
C. assets being carried at a higher value than their tax base.

 

3. APL Corp reported a total deferred tax asset in 2009 of $45,189, offset by a $45,189 valuation allowance. APL Corp most likely:

A. Has deferred tax assets equal to deferred tax liabilities.
B. Fully utilized the deferred tax asset in 2009.
C. Expects not to earn any taxable income before the deferred tax asset expires.

 

Tomorrow’s questions of the day will be on the topic of R32: Non-current (Long-term) Liabilities
 

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