An item that would create a permanent difference between financial statement and taxable incomes would be a. a balance in the Unearned Rent account at year end. b. using accelerated depreciation for tax purposes and straight-line depreciation for book purposes. c. a fine resulting from violations of OSHA regulations. d. making installment sales during the year. Which of the following temporary differences results in a deferred tax asset in the year it arises? I. Accrual for product warranty liability II. Unearned revenue received III. Prepayment of insurance expense a. I and II only. b. II only. c. III only. d. I and III only. Accounting for income taxes under new FASB standards can result in the reporting of deferred taxes as a. a current asset. b. a non current liability c. a contra-asset account. d. a current liability.
1 ANSWER IS
(C) A FINE RESULTING FROM VIOLATIONS OF OSHA REGUALTION.
THIS WILL NOT BE ALLOWED AS EXPENSE IN ANY YEAR IN TAXABLE PROFIT CALCULATION. ITS PERMANANT.
2 ANSWER IS (A) I AND II ONLY.
3 ANSWER IS (C) CONTRA ASSET ACCOUNT