Question
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
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. Use the appropriate number to indicate your answer for each.
(a) ______ For some assets, straight-line depreciation is used for tax purposes while the double-declining balance method is used for financial reporting purposes.
(b) ______ Warranty expenses are accrued when the sale is made, but cannot be deducted until the work is actually performed.
(c) ______ The company uses the percentage of the complete method to record revenue on long-term contracts for financial reporting purposes, but the completed contract method is used for tax purposes.
(d) ______ Accelerated depreciation for tax purposes and the straight-line depreciation method is used for financial reporting purposes for some equipment.
(e) ______ A landlord collects some rents in advance. Rents received are taxable in the period when they are received.
(f) ______ For financial reporting purposes, an estimated loss from a lawsuit is accrued. The tax return will not report a deduction until an amount is paid.
(g) ______ A liability for a guarantee is accrued for financial reporting purposes.
(h) ______ Installment sales are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes.
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