Answer & Explanation

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Future deductible amounts refer to situations where transactions are reported in such a way that they will reduce taxable income in future periods. Understanding this concept is crucial as it aids in accurate financial reporting and tax planning, ensuring compliance with tax laws and financial standards. $1$

Step$-$by$-$step explanation

$1.**$Depreciation Differences$**$:

$-$ Companies often use different methods of depreciation for financial reporting and tax purposes. For instance, a company might use straight$-$line depreciation for financial reporting, but an accelerated method for tax purposes. This discrepancy creates a temporary difference, leading to future deductible amounts.

$-$ On the financial statements, this difference is recognized as a deferred tax asset, indicating that the company will have lower taxable income in the future.

$2.**$Revenue Recognition Differences$**$:

$-$ Revenue recognition can also differ between financial reporting and tax purposes. For example, a company may recognize revenue for financial reporting when earned, but for tax purposes when received.

$-$ If a company receives advance payments, it may recognize this revenue for tax purposes immediately, but defer the revenue recognition for financial reporting until the goods or services are delivered. This situation creates a temporary difference, resulting in future deductible amounts.

$-$ This is again recognized as a deferred tax asset on the balance sheet, which will reduce future taxable income.

These scenarios highlight the importance of recognizing and understanding the implications of future deductible amounts on financial statements and tax liabilities, aiding in better financial planning and compliance. $1$