Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. For each item below, indicate whether it involves: 1. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3. A permanent difference.
Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. For each item below, indicate whether it involves: 1. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3. A permanent difference.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 1P: Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are...
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Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.
For each item below, indicate whether it involves:
1. | A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a |
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2. | A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a |
|
3. | A permanent difference. |
Use the appropriate number to indicate your answer for each.
(a) |
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The MACRS depreciation system is used for tax purposes, and the |
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(b) |
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A landlord collects some rents in advance. Rents received are taxable in the period when they are received. | ||
(c) |
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Expenses are incurred in obtaining tax-exempt income. | ||
(d) |
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Costs of guarantees and warranties are estimated and accrued for financial reporting purposes. | ||
(e) |
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Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. | ||
(f) |
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For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are shorter for tax purposes. | ||
(g) |
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Interest is received on an investment in tax-exempt municipal obligations. | ||
(h) |
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Proceeds are received from a life insurance company because of the death of a key officer. (The company carries a policy on key officers.) | ||
(i) |
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The tax return reports a deduction for 80% of the dividends received from U.S. corporations. The cost method is used in accounting for the related investments for financial reporting purposes. | ||
(j) |
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Estimated losses on pending lawsuits and claims are accrued for books. These losses are tax-deductible in the period(s) when the related liabilities are settled. | ||
(k) |
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Expenses on stock options are accrued for financial reporting purposes. |
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