Using the straight-line method of depreciation for reporting purposes and accelerated depreciation for tax purposes would most likely result in:
A. Valuation allowance
B. Deferred tax liability
C. Temporary difference
Answer: C
Explaination: C is correct, because the differences between tax and financial accounting will correct over time, the resulting deferred tax asset, for which the expense was changed to the income statement but the tax authority has not yet been paid, will be a temporary differences.
Isnt this a DTL? since accelerated depreciation would result in lower tax payable versus higher income tax expense?作者: Siddimaula 时间: 2011-7-13 16:35
Yes it should be B. DTL.
Please check errata.作者: invic 时间: 2011-7-13 16:35
per errata:In problem 1-B (p. 418), change tax liability to tax asset.
Looks like C or B was right, but B should have been different.
