Lin has just completed its first year of operations and has a number of differences between its pretax financial income and taxable income. The differences at the end of 2016 are as follows: Lin recorded $7.000 of interest revenue on municipal bonds during 2016. $15,000 of accrual basis vales were recognized in income during 2016. They are expected to be received in cash during January 2017. Depreciation on machinery totaled $28,000 using straight-line depreciation for financial statements. Lin's tax accountant recorded $36,000 of depreciation on the company's tax return. Lin was fined $3,000 for violating certain labor laws during 2016. Lin paid the fine during 2016 and agreed to ensure future violations would not occur. Bryant Corporation has agreed to rent space from Lin in 2017. In December 2016, Lin received $7,500 from Bryant in advance for rent. For 2016, Lin reported $9,500 of warranty expense on its income statement. The company's warranty liability at the end of 2016 was $6,250. Lin expects additional warranty costs to be paid during 2017. Required: For each item, determine if it results in a temporary or permanent difference. It the item results in a temporary difference, determine if it results in a deferred tax asset or deferred tax liability. For each item, determine if it initially results in pretax financial income being greater than or less than taxable income. Next Level Discuss why permanent differences do not impact future periods' taxable income and how these differences affect tax rates