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All differences between the amount of income tax payable and the amount of income tax expense can be classified as either permanent differences or temporary
All differences between the amount of income tax payable and the amount of income tax expense can be classified as either permanent differences or temporary differences. A num- ber of items that may give rise to differences are as follows: A. Season tickets are sold in advance by the Jacksonville Jaguars football team. B. Available-for-sale securities decreased in value during the year. C. A company accrues interest on a note receivable in the period before the borrower pays. D. Subsequent expenditures related to depreciable assets are expensed for tax purposes and capitalized for accounting purposes. E. A company applies the matching concept in accounting for expected warranty costs. F A company acquires a business and recognizes goodwill. Tax laws require goodwill to b amortized over 15 years.. G. Patents are amortized over a longer period for GAAP than for tax purposes. H. The direct write-off method is used to account for bad debts for GAAP purposes. I. Customers pay amounts due in the period after the sale is recognized. J. A company complies with the LIFO conformity rule. K. A company receives proceeds from a life insurance policy on which it is the beneficiary. L. A company is assessed a late fee for submitting its payroll taxes after the due date. M. A company pays commissions related to the purchase of municipal bonds. Required: For each of the items listed, indicate whether the type of difference is permanent (P), temporary (T), or neither (X), and whether the item will create a deferred tax asset (DTA), a deferred tax liability (DTL), or neither (X)
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