Under US GAAP, recognizing expense earlier on the tax return than it is recognized in the income statement
| | Results in the recognition of a deferred tax asset. |
| | Results in the recognition of a deferred tax liability. |
| | Creates future deductible amounts. |
In 2018, Kirk reported Income before Depreciation and Income Tax of $1,640,000. Kirk also had Depreciation Expense of $360,000 on its GAAP based income statement and $480,000 for income tax purposes. Kirks income tax rate is 30%. Which of the following would not be correct based upon 2018s recording of Kirks income tax payment?
| | Decrease in Cash $384,000 (Income tax payment) |
| | Increase in Deferred Tax Liability $36,000 |
| | Increase in Income Tax Expense $348,000 |
| | Decrease in Deferred Tax Liability of $36,000 |
In the case of a capital lease (operating or finance), interest expense recognized by the lessee each period over the lease term will:
| | Remain the same because the periodic lease payment is a constant amount. |
| | Remain the same because the implicit rate is fixed in the lease contract. |
For which of the following leases will the annual lease expense recognized on the lessees income statement be the same amount for each year of the lease?
| | Annual lease expense will be the same each year regardless of lease type. |
On January 1, 2018, Barkley Company entered into a four-year lease for machinery with annual payments of $5,000 due at the beginning of the year. Field paid no initial direct costs, no residual guarantees, and the implicit rate of interest is 5%. The value of the lease liability at the commencement of the lease is 18,616. What amount of amortization of the right to use asset would appear on Barkleys 2018 income statement relating to the lease?
