In the recognition of revenues and expenses, temporary and permanent differences between the ﬁnancial statements and the tax return will result in a Future Income Tax Asset.

Question

Quizplus · Accepted Answer

Temporary differences between financial statements and tax returns can result in either a future income tax asset or a future income tax liability, depending on whether the difference will result in deductible amounts in the future (leading to a future tax asset) or taxable amounts in the future (leading to a future tax liability). Permanent differences do not result in future tax assets or liabilities because they do not reverse over time.

In the Recognition of Revenues and Expenses, Temporary and Permanent