Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax asset?

Question

Quizplus · Accepted Answer

Unrealized losses from recording inventory impairments creates a difference between financial accounting and tax accounting. Financial accounting rules require the inventory to be written down to its market value, while tax accounting rules do not allow for such deductions until the inventory is sold. This creates a temporary difference between the two methods and results in a deferred tax asset.

Which of the Following Differences Between Financial Accounting and Tax