Which One of the Following Transactions Would Result in the Creation

question 4

Multiple Choice

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

• A)interest received on municipal bonds
• B)a contingent liability expensed in the current period that is expected to require a cash payment in three years
• C)royalties received in advance that are taxable when received, but that will be earned within the next three months
• D)using an accelerated depreciation method for income tax purposes and the straight-line method for financial reporting purposes

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Definitions:

Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) is a U.S. law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards.

Overtime Provisions

Regulations that define the conditions under which employees are entitled to extra pay for working beyond the standard working hours.

Exempt Employees

Workers who are exempt from the overtime pay requirements and minimum wage laws under the Fair Labor Standards Act due to their job duties and salary levels.

Fair Labor Standards Act

U.S. legislation aimed at protecting workers against unfair pay practices and work conditions, establishing minimum wage, overtime pay eligibility, and child labor standards.