For each of the items below, determine whether the items are temporary differences or permanent differences. Also, for each temporary difference, determine whether a deferred tax asset or deferred tax liability is created by the temporary difference described. Assume that each of the temporary differences described is an originating difference. Municipal bond interest
Accrued warranty expense
Sales revenues received in advance
Prepaid insurance where the tax deduction in future years will be less than the book expense
Tax depreciation expense exceeds GAAP (book) depreciation expense
Accrued bad debt expense
The dividends received deduction
Sales revenue recognized currently for GAAP, recognized for tax purposes in future years)
Life insurance payments for executives for which the company is the beneficiary
Fines paid for law violations
What will be an ideal response?
Permanent difference
Temporary difference, deferred tax asset
Temporary difference, deferred tax asset
Temporary difference, deferred tax liability
Temporary difference, deferred tax liability
Temporary difference, deferred tax asset
Permanent difference
Temporary difference, deferred tax liability
Permanent difference
Permanent difference
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