Listed below are items that are treated differently for accounting purposes than they are for tax purposes. Indicate whether the items are permanent differences or temporary differences. For temporary differences, indicate whether they will create deferred tax assets or deferred tax liabilities. 1. Investments accounted for by the equity method (ignore dividends received deduction). 2. Advance rental receipts. 3. Fine for polluting. 4. Estimated future warranty costs. 5. Excess of contributions over pension expense. 6. Expenses incurred in obtaining tax-exempt revenue. 7. Installment sales. 8. Excess tax depreciation over accounting depreciation. 9. Long-term construction contracts. 10. Premiums paid on life insurance of officers (company is the beneficiary).

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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Listed below are items that are treated differently for accounting purposes than they are for tax purposes. Indicate whether the items are permanent differences or temporary differences. For temporary differences, indicate whether they will create deferred tax assets or deferred tax liabilities.

1.		Investments accounted for by the equity method (ignore dividends received deduction).
2.		Advance rental receipts.
3.		Fine for polluting.
4.		Estimated future warranty costs.
5.		Excess of contributions over pension expense.
6.		Expenses incurred in obtaining tax-exempt revenue.
7.		Installment sales.
8.		Excess tax depreciation over accounting depreciation.
9.		Long-term construction contracts.
10.		Premiums paid on life insurance of officers (company is the beneficiary).

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