Question

The following are common items that are treated differently for financial reporting purposes than they are for tax purposes:
1. The excess amount of a charge to the accounting records (allowance method) over a charge to the tax return (direct writeoff method) for uncollectible receivables
2. The excess amount of accrued pension expense over the amount paid
3. The receipt of dividends from a taxable Canadian corporation that are treated as income for accounting purposes but are not subject to tax
4. Expenses incurred in obtaining tax-exempt income
5. A trademark that is acquired directly from the government and is capitalized and amortized over subsequent periods for accounting purposes and expensed for tax purposes
6. A prepaid advertising expense that is deferred for accounting purposes and deducted as an expense for tax purposes
7. Premiums paid on life insurance of officers (where the corporation is the beneficiary)
8. A penalty paid for filing a late tax return
9. Proceeds of life insurance policies on lives of officers
10. Restructuring costs that are recognized as an unusual item on the income statement and are not deductible until actual costs are incurred
11. Unrealized gains and losses that are recognized on investments recorded as FV-NI or FV-OCI and are not taxable or deductible until realized for tax purposes
12. Excess depletion for accounting purposes over the amount taken for tax purposes
13. The estimated gross profit on a long-term construction contract that is reported in the income statement, with some of the gross profit being deferred for tax purposes
Instructions
(a) Indicate for each item above if the situation is a permanent difference, or a reversing difference resulting in a temporary difference.
(b) Indicate for each item above if the situation will usually create future taxable amounts, resulting in a future tax liability; or future deductible amounts, resulting in a future tax asset; or whether it will have no future tax implications.


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  • CreatedAugust 23, 2015
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