1. Required (13 marks):

1. What is the difference between a reversible difference and a permanent difference in terms of taxes? Give two examples of each type.
2. For each of the examples identified state whether it will create a deferred tax asset or liability in the year it is occurs. Be specific.
3. Argue why deferred tax assets and deferred tax liabilities are allowed to be recorded on the statement of financial position as some individuals dismiss future taxes as not important or not real?