APB #11
- In our illustration the vacation expense will be deducted from tax revenues in the future and reduce the tax payable.
The company also incurred penalties of $200 which were not deductible for tax purposes. They were expensed in determining the book income of the current year. What type of difference is this?
- Permanent differences affect only the books or the tax return but NOT both.
- They do not give rise to deferred taxes.
- They are an adjustment of the period when reconciling book and taxable income but no FTA or FDA arises.