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This year, a company has each of the following income statement items: Gross profits on installment sales. Revenues...

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Accounting

This year, a company has each of the following income statementitems:

  1. Gross profits on installment sales.
  2. Revenues on long-term construction contracts.
  3. Estimated costs of product warranty contracts.
  4. Premiums on officers’ life insurance policies with the companyas beneficiary.

Indicate where deferred income taxes are reported in thefinancial statements. Specify when deferred income taxes would needto be recognized for each of the items above, and indicate therationale for such recognition.

Answer & Explanation Solved by verified expert
4.3 Ratings (585 Votes)
ANSWER Deferred tax is reported on the balance sheet as asset and liabilities The total of all deferred tax assets should be disclosed Companies should also disclose the types of temporary difference carry forwards or carry backs that give rise to significant portions of deferred tax liabilities and assets GRASS PROFITS ON INSTALMENT SALES Gross profits on installment sales assets may be recognized for    See Answer
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