Question

For each item below, indicate whether it involves: (1) A temporary difference that will result in...

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. Use the appropriate number to indicate your answer for each. (a)____ Estimated losses on pending lawsuits and claims are accrued for books. These losses are tax deductible in the period(s) when related liabilities are settled. (b)____ Interest is received on an investment in tax-exempt municipal obligations. (c ) ___ Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. (d) ___ Costs of guarantees and warranties are estimated and accrued for financial reporting purposes. (e)____ For some assets, straight-line depreciation is used for both financial reporting and tax purposes, but the assets' lives are shorter for tax purposes.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

(a) 1____ Estimated losses on pending lawsuits and claims are accrued for books. These losses are tax deductible in the period(s) when related liabilities are settled.

(b) 3____ Interest is received on an investment in tax-exempt municipal obligations.

(c ) 2___ Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes.

(d) 1___ Costs of guarantees and warranties are estimated and accrued for financial reporting purposes.

(e) 2____ For some assets, straight-line depreciation is used for both financial reporting and tax purposes, but the assets' lives are shorter for tax purposes.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Indicate whether the items are permanent differences or temporary differences. For temporary differences, indicate whether they...
Indicate whether the items are permanent differences or temporary differences. For temporary differences, indicate whether they will create deferred tax assets or deferred tax liabilities. 5. Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. 6. Interest is received on an investment in tax-exempt governmental obligations. 7. For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are...
For each of the hypothetical circumstances listed below, determine whether the difference between book and tax...
For each of the hypothetical circumstances listed below, determine whether the difference between book and tax records represents a temporary timing difference resulting in either a deferred tax asset or a liability or represents a permanent timing difference. Also determine how each difference would be classified on the financial statements (current or non-current). Click on each cell and select from the list provided. Options to pick from: Temporary timing difference, asset, current Temporary timing difference, asset, non-current Temporary timing difference,...
1) a) What is a temporary difference? Explain how you determine whether a temporary difference gives...
1) a) What is a temporary difference? Explain how you determine whether a temporary difference gives rise to a deferred tax asset or a deferred tax liability. b) Does a long-service leave liability result in a temporary difference? Explain why, or why not.
1) Interest from tax exempt municipal bonds is an example of a temporary difference which will...
1) Interest from tax exempt municipal bonds is an example of a temporary difference which will result in a deferred tax liability. (answer True or False) 2) Warranty expense accrued on the income statement but not yet deducted on the tax report is an example of a temporary difference which will give rise to a deferred tax asset. (answer True or False) 3) Income tax payable is computed by multiplying taxable income by the current tax rate. (answer True or...
ABC LLC. has two temporary differences at the end of 2019. The first difference stems from...
ABC LLC. has two temporary differences at the end of 2019. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. ABC’s accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows. 2020 2021 2022 2023 Taxable amounts $41,800 $52,100 $59,600 $75,200 Deductible amounts (15,700) (17,400) $41,800 $36,400 $42,200 $75,200 As of the beginning of 2019, the enacted tax rate is 34%...
ABC LLC. has two temporary differences at the end of 2019. The first difference stems from...
ABC LLC. has two temporary differences at the end of 2019. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. ABC’s accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows. 2020 2021 2022 2023 Taxable amounts $41,800 $52,100 $59,600 $75,200 Deductible amounts (15,700) (17,400) $41,800 $36,400 $42,200 $75,200 As of the beginning of 2019, the enacted tax rate is 34%...
The following facts relate to Oriole Corporation. 1. Deferred tax liability, January 1, 2020, $36,000. 2....
The following facts relate to Oriole Corporation. 1. Deferred tax liability, January 1, 2020, $36,000. 2. Deferred tax asset, January 1, 2020, $12,000. 3. Taxable income for 2020, $126,000. 4. Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $276,000. 5. Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $114,000. 6. Tax rate for all years, 20%. No permanent differences exist. 7. The company is expected to operate profitably in the...
Which of the following transactions would typically result in the creation of a deferred tax liability?...
Which of the following transactions would typically result in the creation of a deferred tax liability? a. Gross profit on installment sales is recognized currently in pretax financial income but is not taxable for income tax purposes until cash is received. b. Losses recognized in pretax accounting income from an investment in a subsidiary are accounted for by the equity method but not deductible for income tax purposes until the investment is sold. c. Rents received in advance are taxable...
Sunland Inc. has two temporary differences at the end of 2016. The first difference stems from...
Sunland Inc. has two temporary differences at the end of 2016. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Sunland’s accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows. 2017 2018 2019 2020 Taxable amounts $38,300 $51,000 $58,800 $79,300 Deductible amounts (14,200 ) (19,800 ) $38,300 $36,800 $39,000 $79,300 As of the beginning of 2016, the enacted tax rate...
Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced...
Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: ($ in thousands) Situation 1 2 3 4 Taxable income $ 108 $ 240 $ 244 $ 332 Future deductible amounts 16 20 20 Future taxable amounts 16 16 52 Balance(s) at beginning of the year: Deferred tax asset 2 15 4 Deferred tax liability 8 2 The enacted tax rate is 25%. Required: For each situation, determine the following: (Enter...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT