1continue..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.(h) 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) 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) 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) Expenses on stock options are accrued for financial reporting purposes.

Answered: Listed below are items that are…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

1continue..

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.
(h)				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)				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)				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)				Expenses on stock options are accrued for financial reporting purposes.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions