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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Temporary and Permanent Differences In the current year, you are calculating a diversified company’s deferred taxes. Based on an analysis of the company’s current taxable income and pretax financial income, you have identified the following items that create differences between the two amounts and that may result in differences between the company’s future taxable income and its nature pretax financial income:

Chapter 18, Problem 2P, Temporary and Permanent Differences In the current year, you are calculating a diversified companys

Required:

For each difference, indicate whether it is a temporary difference (T) or a permanent difference (P) by placing the appropriate letter on the line provided. If the difference is a temporary difference, also indicate for the current year whether it will result in a future taxable amount (FT) or a future deductible amount (FD).

To determine

Indicate whether the items are temporary difference or permanent difference.

Explanation

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.

Permanent Difference Permanent difference refers to those differences that are caused by the transactions and events that exist under the law, which will never affect taxable income or taxes payable. This difference will never be eliminated.

Indicate whether the items are temporary difference or permanent difference:

ItemsClassification
1...

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