Chapter 16, Problem 16.1BYP

1.

To determine

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods.

Permanent Difference

Permanent difference refers to those differences that ae caused by transactions and events, that under existing law will never affect taxable income or taxes payable. This difference will never be eliminated.

To explain: The difference between temporary difference and permanent difference with example

2.

To determine

To explain: The difference between intraperiod tax allocation and interperiod tax allocation with example.

3.

To determine

To explain: The treatment of deferred tax asset and deferred tax liability in financial statement.