US GAAP ASC 740

Temporary Tax Difference

Timing difference between GAAP book revenue/expense recognition and tax return filing.

Detailed Definition & General Ledger Context

Temporary Tax Difference is governed by US GAAP ASC 740 in general ledger financial reporting and fixed asset sub-ledgers. Maintaining accurate records of Temporary Tax Difference is vital for audit compliance, asset balance verification, and tax schedule reconciliation.

Mathematical Standard & Equation

            Temporary Difference = GAAP Book Value of Asset/Liability - Tax Basis
          

General Ledger Journal Entry Standard

            Debit: Taxation Expense Account

            Credit: Taxation Contra-Asset / Payable Liability

Common Operational Pitfalls

Failing to reconcile fixed asset sub-ledgers with the general ledger trial balance monthly.
Conflating IRS MACRS tax depreciation tables with GAAP straight-line financial reporting.
Misclassifying lease obligations under ASC 842 capitalization standards.

Used in these R2R Calculators

Launch Calculator →

Authoritative Source

Source: https://www.fasb.org/ ↗