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:

Income Inequality

The unequal distribution of income among individuals or households within a certain area, leading to economic disparities.

Less Happiness

A state or feeling of reduced joy or contentment compared to one's typical emotional experience.

Communities

Are groups of people sharing a common environment, interests, or identities, often providing a sense of belonging and support.

Adaptation-Level Phenomenon

The inclination of people to evaluate different stimuli and scenarios in comparison to their past experiences.