Question
Three Little Pigs Company purchased $825,000 of inventory in its first year of operations and did not sell any of it. Three Little Pigs Company
Three Little Pigs Company purchased $825,000 of inventory in its first year of operations and did not sell any of it. Three Little Pigs Company has a tax rate of 31%. Assume that for tax purposes, the IRS only allows Three Little Pigs Company to deduct the cost of inventory that was sold. What type of tax difference will this create for Three Little Pigs Company? A temporary tax difference that gives rise to a Deferred Tax Asset of $255,750. A temporary tax difference that gives rise to a Deferred Tax Liability of $255,750. None A permanent tax difference of $255,750.
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