What Kinds of Temporary Differences Related to Income Taxes Can

question 45

Multiple Choice

What kinds of temporary differences related to income taxes can arise under IFRS that don't occur under U.S. GAAP?

• A) Book and tax differences related to the amortization of property, plant, and equipment for book purposes and cost method for tax purposes.
• B) Book and tax differences related to the calculation of impairments for book purposes with adjustment for tax purposes.
• C) Book and tax differences related to the revaluation of property, plant, and equipment for book purposes and cost method for tax purposes.
• D) Book and tax differences related to the calculation of contingent liability for book purposes with no like adjustment for tax purposes.

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Definitions:

Inventory

The total amount of goods and materials held by a company intended for sale in the ordinary course of business.

Incremental Cash Flows

The additional cash inflows or outflows expected from a new project or investment, crucial for determining its net present value.

Capital Budgeting

The process of planning and managing a company's long-term investments in projects and assets, to maximize returns and shareholder value.

Incremental Cash Flows

The additional cash flow a company receives from taking on a new project, excluding any cash flows not directly attributable to the project.