Question
In: Accounting
Explain the following terms as they relate to assets: (a) carrying amount (b) deductible temporary differences...
Explain the following terms as they relate to assets:
(a) carrying amount
(b) deductible temporary differences
(c) taxable temporary differences
(d) tax base.
Solutions
Expert Solution
Carrying Amount
Carrying Amount is the amount at which an asset is recorded in the books of the company as reduced by any accumulated depreciation or impairments. This is also called book value.
Tax Base
Is the amount of asset or income which will be subject to taxation.
Deductible Temporary Differences
A temporary difference is a difference between the carrying amount (book value) of an asset or liability and its tax base. This can happen where different depreciation methods are followed in the books vis-a-vis taxation.
Deductible Temporary difference will be something where the temporary difference will yield reductions in taxation in the future. It means there will be an extra deduction in the future because of this temporary difference now. In other words, less tax in the future.
Taxable temporary Difference
On the other hand, a taxable temporary difference would be something that would lead to an increase in taxable amounts in the future and will lead to more tax in the future. This is in the nature of deferred tax i.e. tax will be paid in the future.
ekkarill92 answered 1 year agoRelated Solutions
At the end of the current year (year 4), DIG company’s only temporary differences are deductible temporary differences in the amount of $4,000.
At the end of the current year (year 4), DIG company’s only
temporary differences are deductible temporary differences in the
amount of $4,000. The company determines that it is more likely
than not that future taxable income will not be sufficient to
realize a tax benefit of $1,000 of the $4,000. Pre-tax financial
income, taxable income, and taxes paid for each of the years 1-4
are all positive, but relatively negligible, amounts. The statutory
tax rate is 30% for all...
($ in millions) Carrying Amount Tax Basis Future Taxable (Deductible) Amount Buildings and equipment (net...
($ in millions)
Carrying
Amount
Tax
Basis
Future Taxable
(Deductible)
Amount
Buildings and equipment (net of accumulated depreciation)
$
128
$
94
$
34
Prepaid insurance
54
0
54
Liability—loss contingency
29
0
(29
)
No temporary differences existed at the beginning of 2018.
Pretax accounting income was $204 million and taxable income
was $145 million for the year ended December 31, 2018. The tax rate
is 40%.
Required:
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Explain the following terms as they relate to skeletal muscle: A. aerobic Endurance B. anaerobic threshold...
Explain the following terms as they relate to skeletal
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Muscle endurance
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Explain the rationale for training muscles both anaerobically
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Explain the following terms as they relate to capital investment/budgeting decisions: a. Erosion b. Synergy c....
Explain the following terms as they relate to capital
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Assets: Thompson Inc. Panna Corporation Carrying Amount Carrying Amount Fair value Cash $400,000 $10,000 $10,000 Accounts...
Assets:
Thompson Inc.
Panna Corporation
Carrying Amount
Carrying Amount
Fair value
Cash
$400,000
$10,000
$10,000
Accounts receivable
80,000
25,000
22,000
Inventory
100,000
70,000
75,000
Plant
500,000
165,000
175,000
Patents
100,000
25,000
25,000
Trade marks
-
-
20,000
Goodwill
120,000
10,000
10,000
Total Assets
1,300,000
305,000
Liabilities and Equity:
Current liabilities
$160,000
55,000
60,000
Long-term liabilities
100,000
65,000
60,000
Common shares (At $10 per share)
1,000,000
100,000
Retained earnings
40,000
85,000
Total liabilities and equity
1,300,000
305,000
Suppose Thompson Inc. purchased...
Assets: Thompson Inc. Panna Corporation Carrying Amount Carrying Amount Fair value Cash $400,000 $10,000 $10,000 Accounts...
Assets:
Thompson Inc.
Panna Corporation
Carrying Amount
Carrying Amount
Fair value
Cash
$400,000
$10,000
$10,000
Accounts receivable
80,000
25,000
22,000
Inventory
100,000
70,000
75,000
Plant
500,000
165,000
175,000
Patents
100,000
25,000
25,000
Trade marks
-
-
20,000
Goodwill
120,000
10,000
10,000
Total Assets
1,300,000
305,000
Liabilities and Equity:
Current liabilities
$160,000
55,000
60,000
Long-term liabilities
100,000
65,000
60,000
Common shares (At $10 per share)
1,000,000
100,000
Retained earnings
40,000
85,000
Total liabilities and equity
1,300,000
305,000
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a. Fran spent $90 for uniforms for use on her
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Deductible for AGI $_________
Deductible from...
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