Reference no: EM132582606

(a) Expenses each year includes $50 million from a two year casualty insurance policy purchased in 2016 for $100 million.

(b) Expenses include $5 million non-deductible insurance premium each year for life insurance on key executives.

(c) Celery Ltd sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2016 and 2017 were $65 million and $80 million respectively. Subscriptions included in 2016 and 2017 financial reporting revenues were $45 million ($20 million collected in 2015 but not earned until 2016) and $60 million respectively.

(d) 2016 expenses included a $25 million unrealized loss from reducing investments (classified as trading securities). The investments were sold in 2017 at a loss of $20 million. Gains or losses are reported in the tax return in the year when the securities are sold.

(e) During 2015, accounting income included an estimated loss of $15 million from having accrued a loss provision. The loss was paid in 2016 at which time it is tax deductible.

Required:

Question 1. Which of the five differences described are temporary and which are permanent differences? Why?Explain