Question

True/False: evenues from installment sales of property reported on financial statements in prior years and currently reported in the tax return create deferred tax assets.

Answer 1

True.

Revenues from installment sales of property reported on financial statements in prior years and currently reported in the tax return create a temporary difference between financial statement income and taxable income. This temporary difference results in deferred tax assets or liabilities.

Specifically, if the revenue from installment sales was recognized earlier for financial reporting purposes than for tax purposes, then the company will have paid less in taxes in the earlier years. This difference creates a deferred tax asset, which is an asset on the balance sheet that represents the additional tax savings that the company can realize in the future as a result of this temporary difference.

Answer 2

False

Step-by-step explanation:

evenues from installment sales of property reported on financial statements in prior years and currently reported in the tax return create deferred tax assets.