Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in thousands) 2021 2022 2023
Times-Roman Publishing Company has reported the following financial figures for its first three years of operation (amounts in thousands):
- Year 2021:
- Subscription revenue recognized (earned): $350
-
Subscription payments received in cash: $390
-
Year 2022:
- Subscription revenue recognized (earned): $360
-
Subscription payments received in cash: $340
-
Year 2023:
- Subscription revenue recognized (earned): $320
- Subscription payments received in cash: $360
The difference between pretax accounting income and taxable income arises because revenue from one-year magazine subscriptions is recognized for tax purposes in the year received, while it is reported in the income statement in later years when the performance obligation is satisfied. The income tax rate is 25% each year, and Times-Roman anticipates profitable operations in the future.
Required: 1. What balance sheet account is responsible for creating a temporary difference in this scenario?
2 Answers
Feb 20, 2025
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