Homework Answers
Interperiod tax allocation arises when the income computed as per applicable GAAP differ from calculation as per tax laws. This arises due to difference in assumption or method in both cases. e.g. life of some assets may be longer for taxation than in financial reporting, hence temporary taxable difference will arise.
In the given cases losses from discontinued operations, interest revenue from municipal bond and the use of similar depreciation computations for both book and tax purposes will not make any difference for interperiod tax allocation as in both cases same treatment will be done.
However, for probable, estimate contingent losses provisions can be made in books, but these are allowed on actual basis for tax purposes. Hence, it requires interperiod tax allocation.
So the correct option is (d).
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hello i am stuck on the line about bad debt
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hello i am stuck on the line about bad debt
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