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Tribal Corporation had the following activity that produced differences in book and tax treatment occur during...

Tribal Corporation had the following activity that produced differences in book and tax treatment occur during the year. Classify whether each book-tax difference is generally favorable or unfavorable (F or U), temporary or permanent (T or P).

 Business-related meal expenses

I.

Favorable, temporary
II.

Unfavorable, temporary
III.

Favorable, permanent
IV.

Unfavorable, permanent
Business   Accounting   
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Answer #1

ANSWER : -

1) Business related expenses which has objective of running business actively and as per laws is allowable expenditure

Hence, Business related meal expenses incurred in relation to business activities like meetings , conversations, seminars etc. valid expenditure , allowable .

2) As per rules and regulations Business related meal expenses are allowed as deduction while computing Business Taxable Income but subject to certain limits of expenses allowed , and disallowed portion of the expenditure is lead to permanent difference between Book profit and Tax Profit .

3) Business Related Meal Expenses are in relation to business activities are very favorable in nature , while doing business incurred costs of meal etc. related costs.

ANSWER : III) Favorable , Permanent -

Business related Meal Expenses

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