Estimated employee compensation expenses earned during the current period but expected to be paid in the next period causes:

Question

Quizplus · Accepted Answer

This occurs because the expense is recognized now, reducing taxable income in the current period but is paid in the future, leading to a temporary difference that will reverse when the expense is paid. This creates a deferred tax asset as the company anticipates a reduction in future taxes.

Estimated Employee Compensation Expenses Earned During the Current Period but Expected