Book-tax differences can be explained in part by examining the objectives underlying financial accounting and taxable income computations. Evaluate this statement

The purpose of the Federal tax return is to report the taxable income of an entity (or consolidated group) for the tax year following U.S. tax law. A corporation's financial statements are prepared in accordance with GAAP. The ASC 740 (SFAS 109) approach produces a total income tax expense (also referred to as the income tax provision) for the income currently reported on a corporation's combined financial statement. This approach follows the matching principle, where all the expenses related to earning income are reported in the same period as the income without regard to when the expenses are actually paid.

The total book tax expense under ASC 740 (SFAS 109) is made up of both current and deferred components. The current tax expense theoretically represents the taxes actually payable to (or refund receivable from) the governmental authorities for the current period. The deferred component of the book tax expense is called the deferred tax expense or deferred tax benefit. This component represents the future tax cost (or savings) connected with income reported in the current period financial statement. Deferred tax expense or benefit is created as a result of temporary differences.