A deductible temporary difference leads to the payment of: A) less tax in the future and...

A deductible temporary difference leads to the payment of:

A) less tax in the future and gives rise to a deferred tax asset.

B) more tax in the future and gives rise to a deferred tax asset.

C) more tax in the future and gives rise to a deferred tax liability.

D) less tax in the future and gives rise to a deferred tax liability.

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Expert Solution

A deductible temporary difference leads to the payment of:

Answer: Option A) less tax in the future and gives rise to a deferred tax asset.

When temporary differences cause accounting income to be less than taxable income, it results in future deductible amounts and a deferred tax asset.

When temporary differences cause accounting income to be greater than taxable income, it results in future taxable amounts and a deferred tax liability.

ekkarill92 answered 2 years ago

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