For each given scenario,

$1)$ Determine whether it represents a temporary or permanent difference for income tax purposes.

$2)$ Discuss whether the situation will result in future taxable amounts or deductible amounts and whether it will lead to deferred tax assets or

liabilities.

Scenario $1$: Estimated warranty costs $($covering a three$$year period$)$ are expensed for accounting purposes when incurred.

Scenario $2$: Depreciation for accounting and income tax purposes differs because of

different bases of carrying the related property. The different bases are a result of a

business combination treated as a purchase for accounting purposes and as a tax$$free exchange for income tax purposes.

Scenario $3$: A company properly uses the equity method to account for its $30\%$ investment in another company. The investee pays dividends that are about $10\%$ of its annual earnings.