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Which statement is correct

Which statement is correct?

A) Income tax system treats income and losses symmetrically.

B) Income tax system treats income and losses asymmetrically.

C) When a company has a loss, a refund is received equal to the loss multiplied by the tax rate.

D) A loss carryforward has immediate cash flow benefits to a company.

2) A company had taxable income of $12 million in fiscal 2013 and paid taxes of 4.8 million; the company incurred a loss of $7 million in fiscal 2015 when the tax rate is 50%. How much refund is the company entitled to?

A) Nil

B) $2.8 million

C) $3.5 million

D) $4.8 million

 

3) A company had taxable income of $2 million in fiscal 2013 and paid taxes of 0.4 million; the company incurred a loss of $0.5 million in fiscal 2015 when the tax rate is 30%. How much refund is the company entitled to?

A) Nil

B) $0.2 million

C) $0.4 million

D) $0.6 million

 

4) A company had taxable income of $2 million in fiscal 2013 and paid taxes of 7.7 million; the company incurred a loss of $8 million in fiscal 2015 when the tax rate is 50%. How much refund is the company entitled to?

A) Nil

B) $0.7 million

C) $3.85 million

D) $4 million

5) A company had taxable income of $2 million in fiscal 2013 and paid taxes of 0.6 million; the company incurred a loss of $7 million in fiscal 2015 when the tax rate is 50%. How much refund is the company entitled to?

A) Nil

B) $0.6 million

C) $1.0 million

D) $3.5 million

 

6) Which statement is not correct?

A) Loss carryback result in definite cash inflow.

B) Loss carryback result in immediate cash inflow.

C) Loss carryforward result in definite cash inflow.

D) Loss carryforward result in uncertain cash inflow.

7) In the first two years of operations, a company reports taxable income of $125,000 and $65,000, respectively. In the first two years, the company paid $50,000 and $13,000. It is now the end of the third year, and the company has a loss of $160,000 for tax purposes. The company carries losses to the earliest year possible. The tax rate is currently 25%.

 

Requirement:

Compute the amount of income tax payable or receivable in the current (third) year.

 

 

 

 

Dec 12 2019 View more View Less

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