Listed below are 10 causes of temporary differences. For each temporary difference indicate the balance sheet account
Question:
Listed below are 10 causes of temporary differences. For each temporary difference indicate the balance sheet account for which the situation creates a temporary difference.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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. Accrued bond interest expense; tax-deductible when paid. 5. Prepaid insurance; tax-deductible when paid 6. Unrealized loss from recording available-for-sale 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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Liability It is also known as future sacrifices of economic benefits A liability is something that a company or a person owes in present for future be...View the full answer
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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