Listed below are 10 causes of temporary differences. For each temporary difference, indicate whether it will create future deductible amounts or future taxable amounts. Temporary Difference 1. Accrual of loss contingency; tax deductible when paid. 2. Newspaper subscriptions; taxable when cash is received, recognized for financial reporting when the performance obligation is satisfied. 3. Prepaid rent; tax deductible when paid. 4. Unrealized gain reported in net income from reporting investments at fair value; taxable when investments are sold. 5. Prepaid insurance; tax deductible when paid. 6. Unrealized loss reported in net income from recording investments at fair value; tax deductible when investments are sold. 7. Warranty expense; estimated for financial reporting when products are sold; deducted for tax purposes when paid. 8. Advance rent receipts on an operating lease as the lessor; taxable when received. 9. Straight-line depreciation for financial reporting: accelerated depreciation for tax purposes. 10. Accrued expense for employee vacation days not yet taken; tax deductible when employee takes vacation in future.

Listed below are 10 causes of temporary differences. For each temporary difference, indicate whether it will create future deductible amounts or future taxable amounts. Temporary Difference 1. Accrual of loss contingency; tax deductible when paid. 2. Newspaper subscriptions; taxable when cash is received, recognized for financial reporting when the performance obligation is satisfied. 3. Prepaid rent; tax deductible when paid. 4. Unrealized gain reported in net income from reporting investments at fair value; taxable when investments are sold. 5. Prepaid insurance; tax deductible when paid. 6. Unrealized loss reported in net income from recording investments at fair value; tax deductible when investments are sold. 7. Warranty expense; estimated for financial reporting when products are sold; deducted for tax purposes when paid. 8. Advance rent receipts on an operating lease as the lessor; taxable when received. 9. Straight-line depreciation for financial reporting: accelerated depreciation for tax purposes. 10. Accrued expense for employee vacation days not yet taken; tax deductible when employee takes vacation in future.

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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