Question

Indicate whether the following statements are "True" or "False" regarding the total book tax expense under ASC 740 (SFAS 10).

a.	The current tax expense theoretically represents the taxes actually payable to (or refund receivable from) the governmental authorities for the current period	True/False
b.	A deferred asset is created when an expense is not deducted on the books in the current period but is deductible for tax in the current period.	True/False
c.	A deferred tax liability is created when income is includible currently for book purposes but is not includible in taxable income until a future period.	True/False
d.	Deferred tax expense or benefit is created as a result of temporary differences.	True/False

Answer 1

a.	The current tax expense theoretically represents the taxes actually payable to (or refund receivable from) the governmental authorities for the current period	TRUE	its true since book tax expense combines current tax payable and deferred tax asset or liability.
b.	A deferred asset is created when an expense is not deducted on the books in the current period but is deductible for tax in the current period.	FALSE	When expense is deductible for tax purpose currently, then it creates deferred tax liability.
c.	A deferred tax liability is created when income is includible currently for book purposes but is not includible in taxable income until a future period.	TRUE	True since income is not includible currently
d.	Deferred tax expense or benefit is created as a result of temporary differences.	TRUE	true since only temparary differences creates deferred tax expense or benefit.