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. (a) ______ For some assets, straight-line depreciation is used for tax purposes while double-declining balance method is used for financial reporting purposes. (b) ______ Warranty expenses are accrued when the sale is made, but cannot be deducted until the work is actually performed. (c) ______ The company uses the percentage of completion method to record revenue on long-term contracts for financial reporting purposes, but the completed contract method is used for tax purposes. (d) ______ Accelerated depreciation is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes, for some equipment. (e) ______ A landlord collects some rents in advance. Rents received are taxable in the period when they are received. (f) ______ Tax-exempt income. (g) ______ An SEC fine related to financial reporting irregularities. (h) ______ For financial reporting purposes, an estimated loss from a lawsuit is accrued. The tax return will not report a deduction until an amount is paid. (i) ______ A liability for a guarantee is accrued for financial reporting purposes. (j) ______ Installment sales are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes
- 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.
(a) ______ For some assets, straight-line
(b) ______ Warranty expenses are accrued when the sale is made, but cannot be deducted until the work is actually performed.
(c) ______ The company uses the percentage of completion method to record revenue on long-term contracts for financial reporting purposes, but the completed contract method is used for tax purposes.
(d) ______ Accelerated depreciation is used for tax purposes, and the
(e) ______ A landlord collects some rents in advance. Rents received are taxable in the period when they are received.
(f) ______ Tax-exempt income.
(g) ______ An SEC fine related to financial reporting irregularities.
(h) ______ For financial reporting purposes, an estimated loss from a lawsuit is accrued. The tax return will not report a deduction until an amount is paid.
(i) ______ A liability for a guarantee is accrued for financial reporting purposes.
(j) ______ Installment sales are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
