Which of the following is not a timing difference that would cause pretax financial accounting income to differ from taxable income?

A) Investment revenue is recognized under the equity method for financial reporting purposes but in a later period as dividends are received for income tax purposes.
B) Life insurance proceeds are received by a corporation upon the death of an insured employee of the corporation.
C) Rent received in advance is taxable when received but is not reported as revenue for financial reporting purposes until the service has actually been provided.
D) MACRS depreciation is used for income tax purposes, and straight-line depreciation is used for financial reporting purposes.

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Marshall Berman · Accepted Answer

Final Answer : B, Explanation :  Life insurance proceeds received by a corporation upon the death of an insured employee of the corporation are not subject to income tax and therefore do not cause a timing difference between financial accounting income and taxable income. The other options listed all involve timing differences that can cause differences between financial accounting income and taxable income.

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