Question

Of the following temporary differences, which one ordinarily creates a deferred tax asset? Group of answer choices Accelerated depreciation for tax reporting Installment sales for tax reporting. Completed-contract method for long-term construction contracts for tax reporting. Accrued warranty expense.

Answer 1

Answer:

An accrued warranty expense ordinarily creates a deferred tax asset.

Explanation:

An accounting term on a firm's balance sheet that is used to illustrate when a firm has overpaid on taxes and is due to some form of tax relief is referred to as a deferred tax asset.

A company that incurs tax loss can carry forward her incurred tax loss to reduce taxable income in future years.

Furthermore, a deferred tax asset is created by an accrued warranty expense.