Which of the Following Transactions Would Typically Result in the Creation

question 30

Multiple Choice

Which of the following transactions would typically result in the creation of a deferred tax liability?

• A)Rents received in advance are taxable when received but are not recognized in pretax financial income until earned.
• B)Gross profit on installment sales is recognized currently in pretax financial income but is not taxable for income tax purposes until cash is received.
• C)Losses recognized in pretax accounting income from an investment in a subsidiary are accounted for by the equity method but not deductible for income tax purposes until the investment is sold.
• D)A contingent liability is recognized as an expense currently in pretax financial income but not deductible for income tax purposes until paid.

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Definitions:

Guided Participation

A learning process where more knowledgeable individuals help to structure activities so that less experienced learners can participate and gain understanding.

Cognitive Development

The process by which individuals acquire, develop, and utilize thinking skills, from infancy through adulthood.

Lev Vygotsky

A Russian psychologist known for his work on cognitive development, particularly the concept of the zone of proximal development.

Zone Of Proximal Development

A concept in educational psychology referring to the difference between what a learner can do without help and what they can achieve with guidance and encouragement from a skilled partner.