Which of the following temporary differences results in a deferred tax asset in the year the temporary differences originates? I. Accrual for product warranty liability II. Subscriptions received in advance. III. Prepaid insurance expense. A. I and II only B. II only C. III only D. I and III only

Which of the following temporary differences results in a deferred tax asset in the year the temporary differences originates? I. Accrual for product warranty liability II. Subscriptions received in advance. III. Prepaid insurance expense. A. I and II only B. II only C. III only D. I and III only

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 1MC: Which of the following is not considered a current liability? A. Accounts Payable B. Unearned...

See similar textbooks

Related questions

Q: Which one of the following is correct as per section 4-10 of ITAA97 tax offsets? Select one:o are…

A: The taxable income for a company is calculated by adding all the taxable revenues, and deducting the…

Q: 1. The amount of income taxes that relate to financial income subject to tax is reported on the…

A: Income Tax Expense comprises of Income-tax due as per income tax act and deferred tax component as…

Q: Describe the types of temporary differences that cause deferred tax liabilities and determine the…

A: Deferred tax liabilities It is a type of liability that arises due to the difference between the tax…

Q: True/False A deferred tax liability represents the increase in taxes payable in future years as a…

A: A deferred tax liability arises when the taxable income of the company is less than the company’s…

Q: Taxable temporary difference occurs when tax is charged in the period: * O None of the above O…

A: Solution: Taxable temporary difference give result to creation of deferred tax liability, it means…

Q: (Identify Temporary Differences and Classification Criteria) The asset-liability approach for…

A: Indicate whether each of the following independent situations should be treated as a temporary…

Q: Question 18 of 75. for the Qualed Which of the following statements is TRUE regarding Form 582 and…

A: the correct option with proper explanation are as follows

Q: Deferred tax expense or benefit is the net change in DTL and DTA for the period. If the increase in…

A: The deferred tax asset or even the deferred tax liabilities are caused due to the variations in the…

Q: The purpose of an inter-period income tax allocation is to a. Allow reporting entities to fully…

A: Tax is the amount which an individual or business is liable to pay the government for business…

Q: a) Explain what a temporary difference is and why it attracts deferred tax

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Deferred income taxes result from: a. The fact that bond interest is deductible in the computa-tion…

A: Option C is correct.

Q: The information below pertains to Mondavi Corporation: (a.) For the current year temporary…

A: The process of recording business transactions in the books of accounts for the first time is…

Q: Which of the following statements concerning IAS 12, Income Taxes, are correct? I. Accounting profit…

A: To solve the question, one should have knowledge of current tax, tax rates applicable for the…

Q: The information below pertains to Mondavi Corporation: (a.) For the current year temporary…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: Intra-period tax allocation is the allocation of the total income tax expense to the various…

A: The answer for the True or false question and relevant explanation are presented hereunder : In Tax…

Q: Which of the following statements is incorrect with respect to determining current E & P? a.…

A: Exempted income are not added backe for calculating taxable income,

Q: Describe the types of temporary differences that cause deferred tax assets and determine the amounts…

A: Deferred tax liabilities It is a type of liability that arises due to the difference between the tax…

Q: Complete the following statements by filling in the blanks. A. In a period in which a taxable…

A: As per the guidelines, only three subparts are allowed to be solved. Please resubmit the remaining…

Q: temporary difference Interest earned on investments in tax-exempt government securities. Interest…

A: Nondeductible expenses refer to those expenses which a company can subtract from its income in order…

Q: a In a period in which a taxable temporary difference reverses, the reversal will cause taxable…

A: Since, we answer only upto three sub-parts, we will answer first three. Please resubmit a new…

Q: Recognition of tax benefits in the loss year due to a NOL carry back involves: O The establishment…

A: Recognition of Tax Benefits in the loss year due to NOL carry back Basically its a treatment of Tax…

Q: A company receives advance payments from customers that are immediately taxable butwill not be…

A: Deferred tax asset

Q: the total income tax expense for the current period. b. the prima facie tax on accounting profit…

A: The tax is an expense for the company but becomes a liability when payable.

Q: Which of the following is an example of a temporary difference which would result in a deferred tax…

A: Solution: Rent revenue collected in advance included in taxable income before it is included in…

Q: In accordance with IAS: 12 Income Taxes, deferred tax liabilities are the amounts of income taxes…

A: Deferred taxes comes into place when there is a difference between pretax financial income and…

Q: Listed below are items that are commonly accounted for differently for financial reporting purposes…

A: The answer is stated below:

Q: ssuming a 35% statutory tax rate applies to all years involved, which of the following situations…

A: Solution Concept Deferred tax asset or deferred tax liabilities shall be recognized when there is…

Q: Recognition of tax benefits in the loss year due to a NOL carry back involves: OThe establishment of…

A: Deferred tax asset: When book profits of entity is less than taxable profits it results in deferred…

Q: sset. a. TRUE b. FALSE

A: Solution: True. This is because Income tax benefit will decrease the current ta eapense means tax…

Q: Deferred tax asset is the * . amount of income tax paid or payable for a year as determined by…

A: Deferred Tax Assets is the deferred tax consequence attributable to a deductible temporary…

Q: a. Identify whether each of the above payments by PSB to APL are subjected to withholding tax. Give…

A: Tax withholding can be defined as the amount of tax being paid by the taxpayer to the government…

Q: 1. What amount of permanent difference between book income and taxable income existed at year end?…

A: As per our protocol we provide solution to one question only but you have asked multiple questions…

Q: a) Explain the difference between pretax financial income and taxable income.

A: Hi! Thank you for the question, As per the honor code, we'll answer the first question since the…

Q: Temporary differences result in future taxable or deductible amounts when the related asset or…

A: Permanent difference refers to those differences that are caused by transactions and events that…

Q: ustification for the method of determining periodic deferred tax expense is based on the concept of?…

A: Solution: According to matching principal, If income is recognized in particular period, all…

Q: The amount of net deferred tax asset/(liability) on January 1, 20x8 is The amount of net deferred…

A: Step 1 Deferred taxes are the tax which is arises due to differences in between the accounting…

Q: Which of the following is not a disclosure related to income taxes based on IAS 12? * O The amount…

A: Answer: IAS 12- Income taxes. The disclosure related to income taxes is mentioned as : taxes…

Q: A temporary difference which would result in a deferred tax liability is a) installment sale…

A: Definition: Deferred tax liability:- It is the liability of tax that a business has yet not paid in…

Q: When accounting standards require recognition of an expense that is not permitted undertax laws, the…

A: Temporary differences incur when there is a difference between the tax base and the carrying amount…

Q: ‘Income tax shall be paid on taxable income times tax rate. It makes sense to pay income tax for…

A: The tax is charged on the taxable income as per the principles of the regulation authorities and any…

Q: A temporary difference which would result in a deferred tax asset is A. Interest revenue on…

A: Introduction: Temporary differences are those differences arising between accounting and taxable…

Q: (Terminology, Relationships, Computations, Entries)InstructionsComplete the following statements by…

A: a: If the taxable difference reverses in a year then the reversal may increase the taxable income…

Q: 1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify classification of…

A: Deferred Tax Assets: It shows the amount of advance tax that a company has paid in excess of the…

Q: When accounting standards require an asset to be expensed immediately but tax rulesrequire the item…

A: A deferred tax asset or DTA is recorded on the balance sheet of the company which results from…

Q: Nonordinary items resulting in income or loss a. include unusual but not infrequent gains. b.…

A: a. include unusual but not infrequent gains.

Question

Which of the following temporary differences results in a deferred tax
asset in the year the temporary differences originates? I. Accrual for
product warranty liability II. Subscriptions received in advance. III. Prepaid
insurance expense.

A. I and II only
B. II only
C. III only
D. I and III only

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2? Taxable interest Unreasonable compensation Payroll penalty Life insurance proceeds (nontaxable to the recipient S corporation)
Among the following transactions: municipal bond income. accrual of a loss contingency. a balance in the Unearned Rent account at year end. a fine resulting from violations of regulations. Which one(s) will result in a permanent difference in pretax financial income and taxable income? Enter 1, 2, 3, or 4 that represents the correct answer. b & c. d only. a & d. a, c, & d.
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 Deductible insurance premiums paid in excess of insurance expense reported for financial reporting. Provision for loss on pending lawsuit expected to be settled during the next reporting period. Insurance premiums paid on life insurance policy where the entity is designated beneficiary. Impairment loss attributed to goodwill. Warranty expense reported for financial reporting purposes in excess of actual costs of repairs done during the period.
How are payments of alimony and separate maintenance under agreements and modifications finalized prior fto 2019 treated tax purposes?
Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively 3. Temporary difference that results in taxable amounts in future years when the related asset or liability is recovered or settled, respectively 4. The future effects on income taxes, as measured by the applicable enacted tax rate and provisions of the enacted tax low, resulting from temporary differences and operating loss carryforwards at the end of the current year 5. The change during the year in a corporations deferred tax liabilities and assets 6. The deferred tax consequences of future taxable amounts 7. The portion of o deferred tax asset for which it is more likely than not that a tax benefit will not be realized 8. Temporary difference that results in deductible amounts in future years when the related asset or liability is recovered or settled, respectively 9. The sum of income tax payable and deferred tax expense (or benefit) 10. The amount of income taxes paid or payable (or refundable) for the current year 11. An excess of tax deductible expenses over taxable revenues in a year that may be carried forward to reduce taxable income in a future year 12. The excess of taxable revenues over tax deductible expenses and exemptions for the year 13. Income tax expense divided by income before income taxes
15. The expense warranty accrual method a. violates the matching conceptb. requires recognition in the period of sale of the estimated warranty expense and warrantyliabilityc. separates accounting for two components of the sales price: the price of the product andthe price of the warrantyd. debits warranty costs to expense in the period when warranty expenditures are made
A contingency that need not be disclosed in the financial statements or in the notes thereto is: A. pending litigation B. possibility of strike. C. deficiency tax assessment. D. note receivable discounted. Of the following items, the one which should be classified as a current liability is: A. an accommodation endorsement. B. a cash dividend declared before the balance sheet date when the date of record is subsequent to the balance sheet date. C. unfunded past service cost of a pension plan. D. dividends in arrears on cumulative preferred stock. Which of the following statements is true concerning contingent liabilities? A. Such liabilities should include obligations of known existence but of unknown amount B. If the definite amount is involved, it is not a contingent liability. C. Such liabilities are generally reported and totaled with other liabilities to make up the liability section of most balance sheets. D. Such liabilities should include obligations known in amount but…
2. Which of the following best describes the accounting for assurance-type warranty costs? * 1 point a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred.
A contingency that need not be disclosed in the financial statements or in the notes thereto is: a. pending litigation. b. possibility of strike. c. deficiency tax assessment. d. note receivable discounted.
An example of an item which is not a liability isa. The portion of a long termdebt due within one yearb. Estimated warranty costsc. Dividends payable common shares of the issuing corporationd. Customers’ deposits Which of the following statements relating to the recognition of liabilities is falseI. Liabilities are recognized when obligations to transfer assets or provide services in the future are incurred in exchangesII. Liabilities arising from non-reciprocal transfers are recognized when the corresponding money, goods, or services are received.III. Mutually unexecuted contracts are generally not recognized as accounting liabilitiesa. I only c. I and II onlyb. II only d. I, II, and III The following statements relate to liabilities. Which statement is true?I. Liabilities may also be measured by estimates of a definitive character when the amount of the liability cannot be measured preciselyII. A long term, non-interest bearing note payable should be recorded at present discounted…
An income not yet paid is not yet to be reported as income for the taxable year. Group of answer choices True False
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.