Provide two examples of expenditures that are typically not allowable for tax deductions but are recognised as an expense for accounting purposes.
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Provide two examples of expenditures that are typically not allowable for tax deductions but are recognised as an expense for accounting purposes.
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- Explain two reasons why expenses may not be deductible for income tax/corporation tax purposesTwo reason why expenses may not be deductiable for income tax/ corporatiion tax purposes.What events create permanent differences between accounting income and taxable income? What effect do these events have on the determination of income taxes payable and deferred income taxes? Identify three examples of permanent differences between accounting income and taxable income.
- Good day Explain three main reasons expenses may not be deductible for incometax/corporation tax purposes. RegardsWhen accounting standards require recognition of an expense that is not permitted undertax laws, the result is a:A . deferred tax liability.B . temporary diff erence.C . permanent diff erence.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 Interest earned on investments in tax-exempt government securities. Interest earned on deposits with bank. Excess of profit earned over the profit reported under the installment method for income tax purposes.
- Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.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 deferred income tax liability. 3. A permanent difference. Use the appropriate number to indicate your answer for each. (a) The MACRS depreciation system is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some plant assets. (b) A landlord collects some rents in advance. Rents received are taxable in the period when they are received. (c)…Some items are treated as a deduction for tax purposes when they are paid but are recognised as expenses when they are accrued for accounting purposes. Which of the following items are of that type? a. Warranty costs b. Goodwill impairment c. Fines d. Entertainment expenses e. Prepaid insurance1. A temporary difference arises when an element of income is reported for tax purposes in the period: a. After it is reported in financial income and before it is reported in financial income. b. After that is reported in financial income. c. Before it is reported in financial income. d. It will have no effect on the taxable amounts.
- Briefly explain the concepts of accounting profit, taxable profit, temporary difference, taxable temporary difference, deductible temporary difference, deferred tax assets and deferred tax liability.Which of the following is a temporary difference that normally is recognized for accounting purposes before being reported as an expense for tax purposes? Unearned revenue Product warranty costs Depreciation Fines resulting from violations of the law.Which of the following statements is NOT correct? A. Taxable income and accounting profit may differ due to differences between the recognition of revenue and expenses for tax and accounting purposes. B. Deferred tax assets must be assessed for the probability of their recovery. Creation of a deferred tax asset or liability occurs only if it reverses at some future date. OC. Deferred tax assets and liabilities may arise due to temporary differences between accounting profit and taxable income. D. Deferred tax liabilities may arise due to permanent differences between accounting profit and taxable income.
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