Exam 3 Intermediate Accounting II

Lessee

• Finance Lease

• Sales Type

Lessor

• Finance Lease

• Sales Type

To become a finance lease, it must meet:

• All 5 criteria

• At least one of the 5 criteria

• 12 months or less

• Over 12 months

To become a operating lease, it must meet:

• All 5 criteria

• None of the 5 criteria

• 12 months or less

• Over 12 months

Permanent Difference

• Enter pretax GAAP financial income but never taxable income or enter into taxable income but never into pretax GAAP income

• Enter pretax GAAP income before taxable income or enter pretax GAAp Income after they enter into taxable income.

Temporary Difference

• Enter pretax GAAP financial income but never taxable income or enter into taxable income but never into pretax GAAP income

• Enter pretax GAAP income before taxable income or enter pretax GAAp Income after they enter into taxable income.

Future Taxable Income > Future Financial Income

• Deferred Tax Liability

• Deferred Tax Asset

Future Taxable Income < Future Financial Income

• Deferred Tax Liability

• Deferred Tax Asset

Deferred Tax Liability

• Anticipated future tax liabilities from situations in which future taxable income will be greater than future accounting income due to temporary differences

• Anticipated future benefits derived from the situation in which future taxable income will be less than future accounting income

Deferred Tax Asset

• Anticipated future tax liabilities from situations in which future taxable income will be greater than future accounting income due to temporary differences

• Anticipated future benefits derived from the situation in which future taxable income will be less than future accounting income