At Origination Which of the Following Temporary Differences Would Create

question 39

Multiple Choice

At origination which of the following temporary differences would create a deferred tax asset?

• A) Tax basis of an asset exceeds its financial reporting basis.
• B) Tax basis of a liability exceeds its financial reporting basis.
• C) Financial reporting basis of an asset is equal to its tax basis.
• D) Financial reporting basis of an asset exceeds its tax basis.

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Definitions:

Risk

The potential for losing something of value, or the potential for an investment's actual return to differ from its expected return.

Economic Value Added

A measure of a company's financial performance based on residual wealth, calculated by deducting a firm's cost of capital from its net operating profit.

Net Present Value

A calculation that determines the value of a series of future cash flows in today's dollars, used to assess the profitability or viability of an investment or project.