The Channelview Company incurred the following expenses in 2010, which are reported differently for financial reporting purposes and taxable income: Estimate of bad debts expense (but not written off) $ \quad \$ 40,000 $
$ \begin{array}{ll}\text { Estimated product warranity costs (but not paic) } & 20,000\end{array} $
If the tax rate is 40%, the total temporary difference is

Question

The Channelview Company incurred the following expenses in 2010, which are reported differently for financial reporting purposes and taxable income: Estimate of bad debts expense (but not written off) $ \quad \$ 40,000 $
$ \begin{array}{ll}\text { Estimated product warranity costs (but not paic) } & 20,000\end{array} $
 If the tax rate is 40%, the total temporary difference is

Quizplus · Accepted Answer

The total temporary difference is the sum of the estimated bad debts expense and the estimated product warranty costs, which is $40,000 + $20,000 = $60,000. These expenses are recognized for financial reporting purposes but not for tax purposes until they are actually incurred, creating a temporary difference.

The Channelview Company Incurred the Following Expenses in 2010, Which $40,000 \quad \$ 40,000 $40,000

The Channelview Company Incurred the Following Expenses in 2010, Which $\quad \$ 40,000$