Asset – liability approach: A process of matching the incomes or gains or assets to the expenses or losses or liabilities is termed as asset liability approach. This approach is widely used by many organizations for recording their business activities.
(a)
To understand: To understand the principles of asset-liability approach.
(b)
(b)
Temporary differences: The difference between the actual taxable liability and the books of records maintained by the individual, firm or an entity is termed as temporary difference. The difference is created due to the tenure of transactions or actual performance of transactions, flow of funds into the business or changes in the value of the asset or liability due to business situations. These differences are adjustable in future when the appropriate time for the transaction arises.
To determine the temporary difference in the books of accounts.
(c)
(c)
To determine the consequence of recording the
Want to see the full answer?
Check out a sample textbook solution
Chapter 19 Solutions
Intermediate Accounting, 17e Rockford Practice Set
- given answer General accounting questionarrow_forwardOn January 1, 2021, XYZ Motors purchased a truck for $42,000. The truck was estimated to have a 6-year useful life with 120,000 miles of total usage. The salvage value was estimated to be $6,000. Using the units-of-production method, what is the depreciation expense per mile?arrow_forwardA company purchases under terms of 3/15, net 45, meaning they receive a 3% discount if they pay within 15 days but must pay the full amount within 45 days. If the company decides to delay payment for an additional 20 days (total 65 days) without penalty, what is the effective annual cost of trade credit? Assume 365 days in a year, and round to two decimal places.arrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education