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Unformatted text preview: Example: Warranty Expenses A (build-in) warranty was provided on sales in 2005 and an associated expense of $500,000 was recognized in the same year. It was expected that the warranty work would be performed in subsequent years. 6. Taxable Temporary Difference and Tax Liability 1 Handout #7 for Bus321-Intermediate Accounting II Professor: Yasheng Chen Example: Installment Sales An installment sale of $300,000 in 2005 was reported as part of accounting income. For tax purpose, the sale was reported over a 3-year period at a constant amount each month as it is collected, beginning January 1, 2005. 7. Calculate future tax assets / liability when there is various tax rates in the future 8. Adjust tax assets / liabilities to reflect future tax rate change 9. Accounting for loss carryover benefits a. Example for loss carryback b. Example for loss carryforward 2...
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