Indicate and Explain Whether Each of the Following Independent Situations

question 127

Essay

Indicate and explain whether each of the following independent situations should be treated as a temporary difference or a permanent difference.(a) For accounting purposes, a company reports revenue from installment sales on the accrual basis. For income tax purposes, it reports the revenues by the installment-sales method, deferring recognition of gross profit until cash is collected.(b) Pretax accounting income and taxable income differ because 80% of dividends received from U.S. corporations was deducted from taxable income, while 100% of the dividends received was reported for financial statement purposes.(c) Estimated warranty costs (covering a three-year warranty) are expensed for accounting purposes at the time of sale but deducted for income tax purposes when paid.

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Definitions:

Traditional Marriage

A legally recognized union between two individuals in a personal relationship, historically based on societal norms and customs.

Divorce Rate

The statistical measure of divorces per population within a specified timeframe, often expressed per 1,000 members of the population.

United States

A country in North America consisting of 50 states and a federal district, known for its large size and diverse population.

Lesbian

An individual of the female gender with feelings of attraction, whether emotional, romantic, or sexual, towards other females.