Which of the following temporary differences creates a deferred tax liability?

Question

Quizplus · Accepted Answer

Accumulated tax depreciation in excess of book depreciation on a building and accumulated tax amortization in excess of book amortization on a customer list create a deferred tax liability because the company has already received a tax benefit from the higher depreciation and amortization expenses on its tax return, but this benefit will need to be reversed in the future when the asset is sold or the customer list is no longer used. The deferred tax liability represents the future tax payment that will need to be made when this reversal occurs. Compensation expensed for book purposes but deferred for tax purposes, on the other hand, creates a deferred tax asset because the company will get a tax benefit in the future when the compensation is paid out and deducted from taxable income.

Which of the Following Temporary Differences Creates a Deferred Tax