Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification.A. Non-deductible expensesB. Non-taxable revenuesC. Deductible temporary differenceD. Taxable temporary differenceDeductible insurance premiums paid in excess of insurance expense reported for financial reporting.Provision for loss on pending lawsuit expected to be settled during the next reporting period.Insurance premiums paid on life insurance policy where the entity is designated beneficiary.Impairment loss attributed to goodwill.Warranty expense reported for financial reporting purposes in excess of actual costs of repairs done during the period.

1. Taxable temporary difference because tax will be charged on the insurance premium in future when…

Answered: Classify the following items that may…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification.

A. Non-deductible expenses

B. Non-taxable revenues

C. Deductible temporary difference

D. Taxable temporary difference

Deductible insurance premiums paid in excess of insurance expense
reported for financial reporting.
Provision for loss on pending lawsuit expected to be settled during the
next reporting period.
Insurance premiums paid on life insurance policy where the entity is
designated beneficiary.
Impairment loss attributed to goodwill.
Warranty expense reported for financial reporting purposes in excess
of actual costs of repairs done during the period.

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