Q16-2 A deferred tax liability (or asset) is described as the tax effect of the temporary difference between the financial statement carrying amount (book value) of an asset or liability and its tax basis. Explain this tax effect of the temporary difference. How might it produce a deferred tax liability? A deferred tax asset? Q16-3 Sometimes a temporary difference will produce future deductible amounts. Explain what is meant by future deductible amounts. Describe two general situations that have this effect. How are such situations recognized in the financial statements? Q16-4 The benefit of future deductible amounts can be achieved only if future income is sufficient to take advantage of the deferred deductions. For that reason, not all deferred tax assets will ultimately be realized. How is this possibility reflected in the way we recognize deferred tax assets?