3 rent and royalties taxed when collected but

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(3) Rent and royalties taxed when collected, but deferred for financial reporting purposes and recognized as revenue when earned in later periods. (4) Unrealized gains or losses recognized in income for financial reporting purposes but deferred for tax purposes. Q5. Differentiate between an originating temporary difference and a reversing difference
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An originating temporary difference is the initial difference between the book basis and the tax basis of an asset or liability. A reversing difference occurs when a temporary difference that originated in prior periods is eliminated and the related tax effect is removed from the tax account. Q8. What is the difference between a future taxable amount and a future deductible amount? When is it appropriate to record a valuation account for a deferred tax asset? A future taxable amount will increase taxable income relative to pretax financial income in future periods due to temporary differences existing at the balance sheet date. A future deductible amount will decrease taxable income relative to pretax financial income in future periods due to existing temporary differences. A deferred tax asset is recognized for all deductible temporary differences. However, a deferred tax asset should be reduced by a valuation account if, based on all available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. More likely than not means a level of likelihood that is slightly more than 50%. Q11. Describe the procedures involved in segregating various deferred tax amounts into current and non current categories. The balances in the deferred tax accounts should be analyzed and classified on the balance sheet in two categories: one for the net current amount, and one for the net noncurrent amount. This procedure is summarized as indicated below. (1) Classify the amounts as current or noncurrent. If an amount is related to a specific asset or liability, it should be classified in the same manner as the related asset or liability. If not so related, it should be classified on the basis of the expected reversal date. (2) Determine the net current amount by summing the various deferred tax assets and liabilities classified as current. If the net result is an asset, report on the balance sheet as a current asset; if it is a liability, report as a current liability.
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(3) Determine the net noncurrent amount by summing the various deferred tax assets and liabilities classified as noncurrent. If the net result is an asset, report on the balance sheet as a noncurrent asset (“other assets” section); if it is a liability, report as a long-term liability. Q16. Differentiate between “loss carryback” and “loss carryforward”. Which can be accounted for with the greater certainty when it arises? Why?
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