What are \"temporary differences\"? Which of the following items are temporary d
ID: 2385728 • Letter: W
Question
What are "temporary differences"? Which of the following items are temporary differences and which are ono-taxable or nondeductible. If it is a temporary difference would the item considered alone create a deferred tax asset or a deferred tax liablity:a. Tax depreciation in excess of book depreciation, $150,000
b. Excess of income on installment sales over income reportable for tax purposes, $130,000.
c. Premium payment for life insurance policy $95,000
d. Rent collected in advance of period earned, $75,000
e. Warranty provision accrued in advance of period pad, $40,000
f. Interest revenue received on municipal bond, $30,000
Explanation / Answer
a) deferred tax liability b)deferred tax liability c) permanent difference not deductible d) deferred tax asset e) deferred tax asset f) permanent difference