Reference no: EM132788524

Question 1: A temporary difference which would result in a deferred tax liability is

Option 1: installment sale included in accounting income at the time of sale but not in tax income
Option 2: subscription received in advance
Option 3: research cost is recognized as expense in accounting income but not in tax income
Option 4: Dividend revenue on equity investment

Question 2: A temporary difference which would result in a deferred tax asset is

Option 1: Interest revenue on municipal bonds
Option 2: Accelerated depreciation for tax but straight line for accounting
Option 3: Tax penalty or surcharge
Option 4: Expenses deducted from accounting income but not deductible for tax purposes

Question 3: A lease agreement will qualify as a finance lease if one of these conditions occur:

Option 1: The lessee returns the leased property to the lessor at the end of the lease term.
Option 2: The lease does not have a bargain purchase option.
Option 3: The lease term is for major of the economic life of the asset.
Option 4: The present value of the minimum lease payment amounts to substantially less than the fair value of the leased asset.

Question 4: It is that portion of the lease payments that is not fixed in amount but is based on a factor other than just the passage of time, for example, percentage of sales, amount of usage, price index and market rate of interest

Option 1: Variable rent
Option 2: Contingent rent
Option 3: Bargain purchase option
Option 4: Executory cost