Knowledge check solutions
- Incorrect. These controls are a critical component of complying with the Sarbanes-Oxley Act.
- Correct. Controls surrounding the tax function are a critical component of compliance with the Sarbanes-Oxley Act.
- Incorrect. The Sarbanes-Oxley Act does apply to the tax function.
- Incorrect. FIN 48 has been codified in FASB ASC 740.
- Correct. One of the primary reasons given for issuing FASB ASC 740 was to reduce the complexity of accounting for deferred taxes.
- Incorrect. The issue of discounting DTAs and DTLs was not addressed by FASB ASC 740.
- Incorrect. FASB ASC 740 specifically precludes guidance on the basic methods of accounting for any investment tax credits.
- Incorrect. The tax code isn’t simplified in FASB ASC 740.
- Incorrect. Events that are recognized in the financial statements that do not have tax consequences are not addressed by FASB ASC 740. These have been known in practice as permanent differences.
- Incorrect. FASB ASC 740 does not address the issue where some items may be reported on the financial statements that will never be reported for tax purposes.
- Correct. FASB ASC 740 applies to temporary differences between events recognized for financial purposes in the current period that will affect taxable income in future periods.
- Incorrect. FASB ASC 740 focuses on temporary differences between financial statement presentation and tax return filings.
- Correct. Future taxable income will be more than book income, and ...
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