Listed below are ten separate situations. For each item indicate whether the difference is (1) temporary...

Listed below are ten separate situations. For each item indicate whether the difference is (1) temporary creating a deferred tax asset (DTA) or a deferred tax liability (DTL) or (2) permanent by marking an X in the appropriate column.

ITEM	Temporary - DTA	Temporary - DTL	PERMANENT
Pension fund contributions are less than pension expense for the current year, resulting in a pension liability on the company’s balance sheet.
Dividend revenue recognized for accounting while a portion is deductible for taxes (dividends received deduction)
Estimated warranty costs: accrual basis for accounting and cash basis for income tax
Fines expensed for accounting but not deductible for tax purposes
Straight-line depreciation for accounting and accelerated depreciation for income tax
Unrealized gain on investments - Income recognized for accounting, but gain recognized only on disposal of the asset for income tax
Rent revenue collected in advance: accrual basis for accounting, cash basis for income tax
Unrealized loss on investments - Income recognized for accounting, but loss recognized only on disposal of the asset for income tax
Probable and estimable litigation contingency: accrual basis for accounting and cash basis for income tax
Interest received on investments in municipal bonds is not taxable

Expert Solution

ITEM	Temporary - DTA	Temporary - DTL	PERMANENT
Pension fund contributions are less than pension expense for the current year, resulting in a pension liability on the company’s balance sheet.		Temporary DTL
Dividend revenue recognized for accounting while a portion is deductible for taxes (dividends received deduction)			X
Estimated warranty costs: accrual basis for accounting and cash basis for income tax		Temporary DTL
Fines expensed for accounting but not deductible for tax purposes			X
Straight-line depreciation for accounting and accelerated depreciation for income tax		Temporary DTL
Unrealized gain on investments - Income recognized for accounting, but gain recognized only on disposal of the asset for income tax		Temporary DTL
Rent revenue collected in advance: accrual basis for accounting, cash basis for income tax	Temporary - DTA
Unrealized loss on investments - Income recognized for accounting, but loss recognized only on disposal of the asset for income tax	Temporary - DTA
Probable and estimable litigation contingency: accrual basis for accounting and cash basis for income tax		Temporary DTL
Interest received on investments in municipal bonds is not taxable			X

ekkarill92 answered 2 years ago

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