What are taxable temporary differences?

A temporary difference is the difference between the carrying amount of an asset or liability in the balance sheet and its tax base. A taxable temporary difference is a temporary difference that will yield taxable amounts in the future when determining taxable profit or loss.

How do you determine a temporary difference?

The temporary difference arising in respect of an asset or liability is calculated by comparing the carrying value of that asset or liability with its tax base. Taxable temporary differences give rise to deferred tax liabilities.

Which of the following temporary differences will result in a deferred tax asset in the initial year?

Of the following temporary differences, which one ordinarily creates a deferred tax asset? Accrued warranty expense. Using straight-line depreciation for financial reporting purposes and MACRS for tax purposes in the first year of an asset’s life creates a: Deferred tax liability.

What are temporary differences defined as with respect to tax MOA?

The temporary differences are the differences between the carrying amount of an asset and liability and its tax base. Tax base is the value of an asset or liability for the tax purposes. The tax base of a liability is usually its carrying amount less amounts that will be deductible for tax in the future.

What are some examples of temporary differences?

Three that commonly occur are accrued liabilities, depreciation, and estimates….Temporary Differences in Tax Accounting

• Accrued liabilities.
• Depreciation.
• Estimates.

What are the examples of temporary differences?

Temporary differences arise when business income or expenses are recognized in different periods on the financial statements than on the tax returns. These differences might include revenue recognition, expenses incurred but not yet paid or depreciation calculation differences, reports Finance Train.

What are the examples of permanent & temporary differences?

Temporary differences occur whenever there is a difference between the tax base and the carrying amount of assets and liabilities on the balance sheet. Permanent differences are differences between the tax and financial reporting of revenue or expense items that will not be reversed in future.

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