Final answer:
A deferred tax asset originates when expenses are recognized on the financial statements before tax returns, or income is taxed before being recognized in the financial statements. Accrual for product warranty liability and subscriptions received in advance are temporary differences that lead to deferred tax assets, while prepaid insurance typically does not.
Step-by-step explanation:
Which of the following temporary differences results in a deferred tax asset in the year the temporary difference originates? The temporary differences that would result in a deferred tax asset are those where expenses are recognized in the financial statements before they are deductible on the tax return, or income is included in taxable income after it's recognized in the financial statements. This is because, under the liability method of accounting for income taxes, a deferred tax asset represents taxes overpaid or prepaid on the current financial income statement, which will be returned in the form of tax savings in future periods.
Looking at the options provided:
- Accrual for product warranty liability: This would result in a deferred tax asset because the expense is recognized in the financial statements now but will not be deductible for tax purposes until the future when the warranty work is performed.
- Subscriptions received in advance: This would also lead to a deferred tax asset because the income is recognized for tax purposes when received, but is recognized in the financial statements over the subscription period.
- Prepaid insurance expense: This typically would not lead to a deferred tax asset because the expense is recognized in both the financial statements and tax returns as the insurance coverage is provided over time.
Therefore, the correct answer is:
a. I and II only.