Which temporary difference would result in a deferred tax asset? a. Tax penalty or surcharge b. Dividend received on share investment c. Excess tax depreciation over accounting depreciation d. Rent received in advance included in taxable income but deferred for financial accounting

Which temporary difference would result in a deferred tax asset? a. Tax penalty or surcharge b. Dividend received on share investment c. Excess tax depreciation over accounting depreciation d. Rent received in advance included in taxable income but deferred for financial accounting

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 49P

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Question

1. Which temporary difference would result in a deferred tax asset?

a. Tax penalty or surcharge

b. Dividend received on share investment

c. Excess tax depreciation over accounting depreciation

d. Rent received in advance included in taxable income but deferred for financial accounting

2. The deferred tax expense is the

a. Increase in deferred tax asset minus the increase in deferred tax liability.

b. Increase in deferred tax liability minus the increase in deferred tax asset.

c. Increase in deferred tax asset plus the increase in deferred tax liability.

d. Decrease in deferred tax asset minus the increase in deferred tax liability.

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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