A taxable temporary difference leads to the payment of: Reading required: Learning objective 13.5: calculate and account for deferred income tax.Group of answer choicesmore tax in the future and gives rise to a deferred tax asset.more tax in the future and gives rise to a deferred tax liability.less tax in the future and gives rise to a deferred tax liability.less tax in the future and gives rise to a deferred tax asset.
Question
A taxable temporary difference leads to the payment of: Reading required: Learning objective 13.5: calculate and account for deferred income tax.Group of answer choicesmore tax in the future and gives rise to a deferred tax asset.more tax in the future and gives rise to a deferred tax liability.less tax in the future and gives rise to a deferred tax liability.less tax in the future and gives rise to a deferred tax asset.
Solution
A taxable temporary difference leads to the payment of more tax in the future and gives rise to a deferred tax liability.
Here's why:
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A taxable temporary difference occurs when the tax base of an asset or liability is less than its carrying amount in the financial statements.
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This difference will reverse in the future, meaning the company will have higher taxable income in the future, leading to more tax payable.
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This future tax obligation is recognized as a deferred tax liability in the company's balance sheet.
So, the correct answer is "more tax in the future and gives rise to a deferred tax liability."
Similar Questions
Taxable temporary differences arise whenI Carrying amount of an asset > Tax base of an assetII Carrying amount of an asset < Tax base of an assetIII Carrying amount of a liability > Tax base of a liabilityIV Carrying amount of a liability < Tax base of a liability Reading required: Learning objective 13.5.3 on pages 423-424Group of answer choicesII, IIII, IVII, IVI, III
A favorable temporary book–tax difference is so named because it causes taxable income to decrease relative to book income in the current year.
When accounting for income taxes a temporary difference occurs in which of the followinga.An item is no longer taxable due to change in tax lawsb.An item is included in the calculation of net income, but is neither taxable nor deductiblec.An item is included in taxable income in one year and in taxable income in a different yeard.Accrual method of accounting is used
Multiple Choice QuestionWhich of the following statements is true?Multiple choice question.Tax-exempt income is not subject to tax, while tax-deferred income will be taxed at a later date.Tax-derived income is not subject to tax, while tax-deferred income will be taxed at a later date.Tax-exempt income is not subject to tax, while tax-derived income will be taxed at a later date.Tax-deferred income is not subject to tax, while tax-exempt income will be taxed at a later date.
Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting and the tax bases of those net assets determined under the Income Tax Assessment Act 1997, are known as: Reading required: Learning objective 13.5: calculate and account for deferred income tax.Group of answer choicestemporary differences.permanent differences.tax losses.the current income tax liability.
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