Expenditures currently deducted in the tax return but not included with expenses in the income statement until subsequent years create deferred tax liabilities.

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Quizplus · Accepted Answer

This statement is true. Deferred tax liabilities arise when there is a difference between the tax basis and book basis of an asset or liability, and this difference will result in taxable amounts in future years. In the case of expenditures currently deducted in the tax return but not included with expenses in the income statement until subsequent years, this creates a temporary difference that will result in a deferred tax liability.

Expenditures Currently Deducted in the Tax Return but Not Included