Question

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 when received but are not recognized in pretax financial income until earned.

d. A contingent liability is recognized as an expense currently in pretax financial income but not deductible for income tax purposes until paid.

Homework Answers

Answer #1

Hi

Let me know in case you face any issue:

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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....
Future deductible amounts will cause: the recording of a deferred tax asset. a decrease in pretax...
Future deductible amounts will cause: the recording of a deferred tax asset. a decrease in pretax financial income in future years. the recording of a deferred tax liability. taxable income to be more than pretax financial income in the future.
Which of the following situations will not cause a deferred income tax amount to be recorded?...
Which of the following situations will not cause a deferred income tax amount to be recorded?                 A)    An expense that is recognized in 20A for income tax purposes and in 20B for financial statement purposes.                 B)    An expense that is recognized in 20A for financial statement purposes but never will be deductible for income tax purposes.                 C)    A revenue is recognized in 20A for income tax purposes and in 20B for financial statement purposes.                 D)    All...
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...
At year-end a landlord collected $200,000 of rent in advance for the next year. Rent received...
At year-end a landlord collected $200,000 of rent in advance for the next year. Rent received in advance is immediately taxable but not recognized as revenue for accounting (GAAP) purposes until the company fulfils its obligation. Which of the following is most accurate in the landlord’s books? A) The tax base of this item is $200,000. B) The carrying amount of this item is $200,000. C) This results in the creation of a deferred tax liability of $200,000. D) This...
The following facts relate to Blossom Corporation. 1. Deferred tax liability, January 1, 2020, $21,000. 2....
The following facts relate to Blossom Corporation. 1. Deferred tax liability, January 1, 2020, $21,000. 2. Deferred tax asset, January 1, 2020, $0. 3. Taxable income for 2020, $99,750. 4. Pretax financial income for 2020, $210,000. 5. Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $252,000. 6. Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $36,750. 7. Tax rate for all years, 20%. 8. The company is expected to operate...
Robinson Company had a net deferred tax liability of $34,476 at the beginning of the year,...
Robinson Company had a net deferred tax liability of $34,476 at the beginning of the year, representing a net taxable temporary difference of $101,400 (taxed at 34%). During the year, Robinson reported pretax book income of $401,400. Included in the computation were favorable temporary differences of $51,400 and unfavorable temporary differences of $20,700. During the year, Congress reduced the corporate tax rate  from 34% to 21%. Robinson's deferred income tax expense or benefit for the current year would be: Net deferred...
At December 31, 2016, Ozuna Inc. had the following deferred tax balances:             Deferred tax liability –...
At December 31, 2016, Ozuna Inc. had the following deferred tax balances:             Deferred tax liability – noncurrent                  $100,000             Deferred tax asset – noncurrent                          80,000             Valuation allowance                                               20,000 These deferred tax balances relate to two items.  First, Ozuna has recorded excess tax deductions related to its plant assets. At December 313, 2016, plant assets had a book value of $1,000,000 and a tax basis of $500,000.  Second, Ozuna had a NOL carryforward of $400,000 at December 31, 2016.  Ozuna determined the appropriate tax rate for recording deferred...
At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account...
At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account and a $128 million balance in its deferred tax liability account. The balances were due to the following cumulative temporary differences: Estimated warranty expense, $15 million: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty). Depreciation expense, $220 million: straight-line in the income statement; MACRS on the tax return. Income from installment sales of properties, $100 million: income recorded in...
You are provided the information for the following asset/liability for the year ended 30 June 2019...
You are provided the information for the following asset/liability for the year ended 30 June 2019 for Decker Ltd. Assume the tax rate is 28 percent. Government Bonds On the balance sheet, there is an investment of $300,000 in Government bonds, which pays interest at 5% per annum. For tax purposes, the interest income from these Government bonds is never taxable. Rent revenue received in advance The opening balance of the rent revenue received in advance was $50,000. During the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT