Listed below are items that are treated differently for accounting purposes than they are for tax purposes.

For each item, indicate in the ANSWER AREA above, whether the items are either an A, B, or C.

1. Permanent difference.
2. Deductible temporary difference = deferred tax asset (dr).
3. Taxable temporary difference = deferred tax liability (cr).

1. 1. Deficit of pension expense versus pension payments (paid $70,000 vs. expensed $69,000).

2. $25,000 warranty costs paid (tax deduction) in current year compared to $26,000 accrued in warranty expense.

3. Expenses of $10,000 that are paid to earn $20,000 of tax-exempt revenue.

4. $200,000 sales received this year, for accounting purposes it will all be earned next fiscal year.

5. Long-term construction contracts profit recognized for accounting are $1,000,000 and cash received is $1,100,000.

6. CCA taken of $60,000 versus the amortization expense accured of $62,000.

7. Life insurance proceeds of $150,000 received by the company on one of its owners.
8. $10,000 of unrealized foreign exchange loss is fully recognized now for accounting purposes.

9. Interest and penalty expenses paid for late submission of income tax installments.
10. Investments accounted for by the equity method earning $20,000 positive net income (while $30,000 was recognized for tax purposes as cash was received).