Which of the Following Results in a Deferred Tax Asset

question 78

Multiple Choice

Which of the following results in a deferred tax asset?

• A) Revenue or gains are recognized earlier for book purposes than for tax purposes.
• B) Operating loss or tax credit carryforwards exist.
• C) Tax basis of an asset is less than its book.
• D) Expenses are deductible earlier for tax purposes than for book purposes.

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Definitions:

Temporal Discounting

The tendency to value immediate rewards more highly than future rewards, leading to a preference for sooner over later outcomes.

Avoidance

A psychological mechanism or behavior aimed at steering clear from a specific stimulus or situation due to its perceived negative consequences.

Status Quo Bias

A cognitive bias that favors existing conditions or states of affairs, leading individuals to resist change.

Omission Bias

The tendency to judge harmful actions as worse, or less moral, than equally harmful omissions (inactions).