Listed below are ten separate situations. For each item indicates whether the difference is (1) temporary creating a deferred tax asset or a deferred tax liability or (2) permanent.

Transcribed Image Text:

Item 1. Pension fund contributions are less than pension expense for the current year, resulting in a pension liability on the company's balance sheet. 2. Dividend revenue recognized for accounting while a portion is deductible for taxes (dividends received deduction). 3. Estimated warranty costs: accrual basis for accounting and cash basis for income tax. 4. Fines expensed for accounting but not deductible for tax purposes. 5. Straight-line depreciation for accounting and accelerated depreciation for income tax. 6. Unrealized gain on investments: FV-NI recognized for accounting, but gain recognized only on disposal of the asset for income tax. 7. Rent revenue collected in advance: accrual basis for accounting, cash basis for income tax. 8. Unrealized loss on investments: FV-NI recognized for accounting, but loss recognized only on disposal of the asset for income tax. 9. Probable and estimable litigation contingency: accrual basis for accounting and cash basis for income tax. 10. Interest received on investments in municipal bonds is not taxable. Deferred Income Tax Account Would Be Asset Liability Permanent