Question: Listed below are items that are commonly accounted for differently for

Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.

Instructions
For each item below, indicate whether it involves:
(1) A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset.
(2) A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability.
(3) A permanent difference.
Use the appropriate number to indicate your answer for each.
(a) ______ For some assets, straight-line depreciation is used for tax purposes while double-declining balance method is used for financial reporting purposes.
(b) ______ Warranty expenses are accrued when the sale is made, but cannot be deducted until the work is actually performed.
(c) ______ The Company uses the percentage of complete method to record revenue on long-term contracts for financial reporting purposes, but the completed contract method is used for tax purposes.
(d) ______ Accelerated depreciation for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some equipment.
(e) ______ A landlord collects some rents in advance. Rents received are taxable in the period when they are received.
(f) ______ Tax-exempt income.
(g) ______ An SEC fine related to financial reporting irregularities.
(h) ______ For financial reporting purposes, an estimated loss from a lawsuit is accrued. The tax return will not report a deduction until an amount is paid.
(i) ______ A liability for a guarantee is accrued for financial reporting purposes.
(j) ______ Installment sales are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes.


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  • CreatedJune 07, 2013
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