Reference no: EM132704176

Problem 1: McMurray Inc. incurred an accounting and taxable loss for 2020. The corporation therefore decided to use the carryback provisions as it had been profitable up to this year. How should the amounts related to the carryback be reported in the 2020 financial statements?

A. The refund claimed should be shown as a reduction of the loss in 2020.

B. The reduction of the loss should be reported as an adjustment to retained earnings.

C. The refund claimed should be reported as revenue in the current year.

D. The refund claimed should be reported as a future charge and amortized over five years.

Problem 2: For calculating income tax expense, ASPE allows the use of

A. the future income taxes method

B. either the taxes payable method or the future income taxes method.

C. the taxes payable method only.

D. any method as long as the CRA approves it.

Problem 3: A deferred tax liability is the

A. current tax consequence of a deductible temporary difference.

B. current tax consequence of a taxable temporary difference.

C. future tax consequence of a taxable temporary difference.

D. future tax consequence of a deductible temporary difference.