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Basic Question 2 of 7
Which of the following will not result in deferred taxes?
B. Different depreciation methods for the tax return and financial reporting
C. Different accounting methods for warranty expense for the tax return and financial reporting
D. Different accounting methods for service contracts for the tax return and financial reporting
A. Including municipal bond interest for financial reporting but not for the tax return
B. Different depreciation methods for the tax return and financial reporting
C. Different accounting methods for warranty expense for the tax return and financial reporting
D. Different accounting methods for service contracts for the tax return and financial reporting
User Contributed Comments 4
| User | Comment |
|---|---|
| kalps | Municipal bond interest is exempt I assume ? It results in a permanent difference |
| sarath | Municipal bond interest is recognized as income for financial reporting and not for tax return. So it results in permanent difference. No deferred taxes... |
| mirfanrana | permanent differences do not result in deffered taxes. |
| Khadria | However, capital gains that occur when the bond is sold or at the time of maturity (if the bond was bought at a discount) are not exempt from any taxes. |
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Learning Outcome Statements
explain how deferred tax liabilities and assets are created and the factors that determine how a company's deferred tax liabilities and assets should be treated for the purposes of financial analysis;
calculate income tax expense, income taxes payable, deferred tax assets, and deferred tax liabilities, and calculate and interpret the adjustment to the financial statements related to a change in the income tax rate;
CFA® 2024 Level I Curriculum, Volume 3, Module 24.