Reference no: EM131003703

Listed below are 10 causes of temporary differences. For each temporary difference indicate the balance sheet account for which the situation creates a temporary difference.

Temporary Difference

_____ 1. Accrual of loss contingency, tax-deductible when paid.

_____ 2. Newspaper subscriptions; taxable when received, recognized for financial reporting when earned.

_____ 3. Prepaid rent, tax-deductible when paid.

_____ 4. Accrued bond interest expense, tax-deductible when paid.

_____ 5. Prepaid insurance, tax-deductible when paid.

_____ 6. Unrealized loss from recording investments available for sale at fair value (tax-deductible when investments are sold).

_____ 7. Bad debt expense; allowance method for financial reporting; direct write-off for tax purposes.

_____ 8. Advance rent receipts on an operating lease (as the lessor), taxable when received.

_____ 9. Straight-line depreciation for financial reporting; accelerated depreciation for tax purposes.

_____ 10. Accrued expense for employee postretirement benefits, tax-deductible when subsequent payments are made.