1.
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. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.
When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account.
To explain: How might many companies also report higher assets as a result of GAAP for postretirement plans
2.
To explain: Thelimitation of discounting
Want to see the full answer?
Check out a sample textbook solutionChapter 16 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
- Give typing answer with explanation and conclusion QUESTION 10 To assist pensioners with more than one source of income, legislation was introduced to make provision for SARS to determine a more accurate PAYE deduction amount, using the latest data available to SARS. Which of the following statements is incorrect? a. This only applies to pensioners. b. Pensioners have to apply to SARS for the PAYE deduction rate applying to them. c. The legislation came into effect on 1 March 2021. d. All of the above. e. None of the above.arrow_forwardQuestion text The computation of pension expense includes all the following except Select one: 13 a. interest on plan assets b. all of these are included C. service cost component measured using current salary levels. d. interest on defined benefit obligation.arrow_forwardQUESTION 18 A tax-advantaged pension plan, such as a 401(k), that both employer and employee may contribute that allows for retirement saving is called a: defined contribution defined benefit plan O a pension plan All of these are truearrow_forward
- SFAS No. 87, “Employers’ Accounting for Pensions,” requires an understanding of certainterms. Discuss the following components of annual pension cost:i. Service costii. Interest costiii. Actual return on plan assetsiv. Amortization of unrecognized prior service costv. Amortization of the transition amountarrow_forwardQuestion 14 what give rises to the changes in PBO balance? A- service cost and interest cost B- prior service cost that is caused by a change in pension formula C- changes in life expectancy estimates D- all of the above O A O C ODarrow_forwardIndicate by letter whether each of the events listed below increases (I), decreases (D), or has no effect (N) on an employer's periodic pension expense in the year the event occurs. Events 1. Interest cost. _____ 2. Amortization of prior service cost---AOCI. ______ 3.Excess of the expected return on plan assets over the actual return _____ 4. Expected return on plan assets. _____ 5. A plan amendment that increases benefits is made retroactive to prior years. ____ 6. Actuary's estimate of the PBO is increased.…arrow_forward
- QUESTION 3 a) Explain the following terms as used in IAS 19 Employee Benefits: (i) The term 'defined benefit pension plan'. (ii) The basis to be adopted in measuring scheme assets. (iii) The basis to be adopted in measuring scheme liabilities.arrow_forwardQuestion 17: Which of these is NOT a regulation set forth within ERISA? Answer: A. Employees must be provided with pertinent retirement plan information. В. Employers are required to offer retirement plans. C. Fiduciaries of the retirement plan may be held accountable for breaches of responsibility. D. There are specific timeframes over which retirement plan benefits become nonforfeitable.arrow_forwardCHOOSE THE LETTER OF THE CORRECT ANSWER What is the employee benefit expense for the current year? a. 1,180,000b. 2,100,000c. 1,850,000d. 1,050,000 What is the remeasurement gain or loss on plan assets on Dec. 31? a. 670,000 gainb. 670,000 lossc. 650,000 gaind. 650,000 lossarrow_forward
- When researching retirement obligations in the FASB Accounting Standards Codification you would look under section 210 310 410 510arrow_forwardIntermediate Financial Reporting 2 Page 2 Question 2 ( Fiscella Landry Corp. (FLC) is a publicly accountable entity that operates a defined benefit plan for its employees. Information about the pension plan is as follows: Defined benefit obligation -December 31, 2019 Pension plan assets --December 31, 2019 $13,400,000 $ 9,500,000 Current service cost- 2020 Benefit payments to retirees Actual return on plan assets - 2020* Contributions to pension plan- 2020* $ 2,300,000 $ 1,200,000 $ 210,000 $ 2.500,000 2020 - Yield on high-quality corporate bonds Defined benefit obligation – December 31, 2020 (per actuary) * Each of these occurred (or was accrued) at December 31, 2020. 5% $18,840,000 On January 2, 2020, FLC made a change to the defined benefit plan formula. Because FLC made the change retrospectively with regard to services rendered by current employees, the defined benefit obligation increased by $3,600,000 on this date. In addition to the contributions listed above, FLC made a…arrow_forward22 What must an employer disclose in a defined contribution plan? The amount to be paid by the employees The basis for determining payments to fund The basis for determining benefits paid out The amount to be paid out NEXT > BOOKMARK Darrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENTIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning