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. (e)                                                                 Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. (f)                                                                 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)                                                                 Interest is received on an investment in tax-exempt municipal obligations.

Of the following temporary differences, which one ordinarily creates a deferred tax asset? O Installment sales for tax reporting. O Fines paid for violation of law. O Prepaid expenses. O Estimated warranty expense.

16. Which of the following is NOT correct? a.Tax credits may be refundable or non-refundable. b. Income from capital related transactions is an example of an exempt income for income tax purposes. c.Tax credits are tax previously paid, or an amount used to reduce tax liability if certain conditions are met. d.Tax Relief is income that is not subject to tax.

Why do deferred tax assets or deferred tax liabilities arise? Explain your answer with suitable example. The reason for the deferred tax assets and liabilities have been explained with suitable example. The concepts of temporary difference, taxable temporary difference, deductible temporary differences have been linked to DTA and DTL.

* Your answer is incorrect. All of the following are procedures for the computation of deferred income taxes except to determine taxes payable. measure the total deferred tax liability for deductible temporary differences. • measure the total deferred tax liability for taxable temporary differences. identify the types and amounts of existing temporary differences.

20. A temporary difference arises when a revenue item is reported for tax purposes in a period   After it is reportedin financial income Before it is reportedin financial income No Yes No No Yes No Yes Yes

An unused tax loss will arise when:   a. Expenses deductible for tax purposes are less than the taxable income   b. Expenses deductible for tax purposes exceeds the taxable income.   c. Expenses deductible for tax purposes are equal to the taxable income   d. Expenses deductible for tax purposes do not exist.

1 contiune 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.   (e)                                                               Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes.(f)                                                               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)…

If the current tax expense is greater than the total income tax expense during the period, there must be a deferred tax benefit.  TRUE OR FALSE

A net operating loss (NOL) carryforward creates: A-a deferred tax liability that should be classified as current liability B- a deferred tax asset that represents future tax benefit that can offset future taxable income O A O B Drouinun