1. (LO 1) In general terms, identify the similarities and differences between the corporate taxable income formula and the individual taxable income formula.
2. (LO 1) Is a corporations choice of its tax year independent from its year-end for financial accounting purposes?
3. (LO 1) Can taxable corporations use the cash method of accounting? Explain.
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4. (LO 2) Briefly describe the process of computing a corporations taxable income assuming the corporation must use GAAP to determine its book income. How might the process differ for corporations not required to use GAAP for book purposes?
5. (LO 2) What role do a corporations audited financial statements play in determining its taxable income?
6. (LO 2) What is the difference between favorable and unfavorable book-tax differences?
7. (LO 2) What is the difference between permanent and temporary book-tax differences?
8. (LO 2) Why is it important to be able to determine whether a particular book-tax difference is permanent or temporary?
9. (LO 2) Describe the relation between the book-tax differences associated with depreciation expense and with gain or loss on disposition of depreciable assets.
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10. (LO 2) When a corporation receives a dividend from another corporation does the dividend generate a book-tax difference to the dividend-receiving corporation (ignore the dividends received deduction)? Explain.