Chopter 16-6 Multiple Choice Questions GAAP regarding accounting for income toxes requires the following procedure A. Computation of deferred tox assets and liabilities based on temporary differences 8. Computation of deferred income tax bosed on permanent differences C Computation of income tox expense based on taxable income D Computotion of deferred income tox based on temporary and permanent differences 2. Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax asset? A. Depreciation early in the life of an asset B. Unrealized gain from recording investments at fair value C. Subscriptions collected in advance. D. None of these answer choices are correct. 3 Using straight-line depreciation for financial reporting purposes and MACRS for tax purposes the first year of an asset's life creates a A. Future deductible amount. B. Permanent difference not requiring inter-period tax allocation C. Deferred tax asset. D. Deferred tax liability. 4. A deferred tax asset represents a A. Future income tax benefit. B. Future cash collection. C. Future tax refund. D. Future amount of money to be paid out