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When income tax expense for a period is greater than income tax payable the difference will be reported how and on which fina
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Answer #1

Solution:

Deferred Tax Liability:

When income tax expense for a period is greater than income tax payable, the difference is treated as a Deferred Tax Liability and shown in the Balance Sheet.

Thus the solution is option D. Deferred Tax Liability and Balance Sheet

The other options are incorrect due to the following reasons :

A. Deferred Tax Asset and Statement of Cash Flows:

When income tax expense for a period is lesser than income tax payable, the difference is treated as a Deferred Tax Asset and shown in the Balance Sheet and not Statement of cash flows. Thus the above option A is incorrect.

B. Deferred Tax Asset and Balance Sheet:

When income tax expense for a period is lesser than income tax payable, the difference is treated as a Deferred Tax Asset and shown in the Balance Sheet. Thus the above option B is incorrect.

C. Deferred Tax Liability and Statement of Cash Flows:

When income tax expense for a period is greater than income tax payable, the difference is treated as a Deferred Tax Liability and shown in the Balance Sheet and not Statement of cash flows. Thus the above option C is incorrect.

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