All of the Following Transactions Lead to Temporary Timing Differences

question 9

Multiple Choice

All of the following transactions lead to temporary timing differences EXCEPT

• A) the use of straight-line depreciation of accounting purposes.
• B) the use of estimated warranty costs for calculating warranty expense.
• C) the recognition of dividend income for dividends received from another Canadian company.
• D) all of the above lead to temporary timing differences.

---

Definitions:

Present Value

The present day value of an anticipated future amount of money or series of cash receipts, calculated with an established rate of return.

CCA Tax Shield

Refers to the reduction in taxable income for businesses through the deduction of depreciation on long-term assets.

Operating Cash Flow (OCF)

Cash generated from a company's regular business operations, indicating its ability to generate sufficient revenue to maintain operations.

Equivalent Annual Cost

A financial metric used to compare the cost effectiveness of various investments with different lifespans, by converting costs into an annualized figure.