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Answer: financial accounting income tax expense is greater than income taxes payable.
A deferred tax liability arises when financial accounting income tax expense exceeds income taxes payable. This occurs due to temporary differences between accounting and taxable income. Options A and B are incorrect because they describe scenarios that would result in deferred tax assets, not liabilities. Temporary differences between accounting profit and taxable profit, as well as the distinction between taxes payable and income tax expense, are key concepts in financial statement analysis.
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A deferred tax liability could arise when:
A
the tax base of an asset exceeds its carrying amount.
B
the carrying amount of a liability is higher than its tax base.
C
financial accounting income tax expense is greater than income taxes payable.
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