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.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 1P: Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are...
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Transcribed Image Text: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.
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