Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

these are all one question. E19.6B (Lo 1,2) (Identify Temporary or Permanent Differences) Listed below are items that are commonly accounted for differently for financial

image text in transcribedthese are all one question.
E19.6B (Lo 1,2) (Identify Temporary or Permanent Differences) Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. Instructions 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 deferned income tax liability. (3) A permanent difference. Use the appropriate number to indicate your answer for each. (a) For some assets, straight-line depreciation is used for tax purposes while double-declining balance methed 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 completion 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 is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes, for some equipment. A landlord collects nome rents in advance. Rents received are takable in the period when they are received. (f) Tax-exempt income. (g) An SEC fine related to financial reporting irnegularities. (h) 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. (i) A liability for a guarantee is accrued for financial reporting purposes. (j) Installment sales are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. E19.6B (Lo 1,2) (Identify Temporary or Permanent Differences) Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. Instructions 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 deferned income tax liability. (3) A permanent difference. Use the appropriate number to indicate your answer for each. (a) For some assets, straight-line depreciation is used for tax purposes while double-declining balance methed 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 completion 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 is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes, for some equipment. A landlord collects nome rents in advance. Rents received are takable in the period when they are received. (f) Tax-exempt income. (g) An SEC fine related to financial reporting irnegularities. (h) 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. (i) A liability for a guarantee is accrued for financial reporting purposes. (j) Installment sales are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions