An accrual of warranty expense for book income calculations this year creates a deferred tax liability in the balance sheet.

Name: An accrual of warranty expense for book income calculations this year creates a deferred tax liability in the balance sheet.
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Question

Quizplus · Accepted Answer

An accrual of warranty expense creates a deferred tax asset, not a liability, because it is an expense recognized for book purposes before it is deductible for tax purposes.

An Accrual of Warranty Expense for Book Income Calculations This