Under US GAAP, If a Firm Writes Down Inventory for Obsolescence

question 112

Multiple Choice

Under U.S. GAAP, if a firm writes down inventory for obsolescence, which of the following is created?

• A) a deferred tax asset
• B) a deferred tax liability
• C) a book basis of assets that is greater than the tax basis
• D) a book basis of liabilities that is less than the tax basis

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Definitions:

Neutrons

Subatomic particles with no electrical charge, found in the nucleus of an atom, and responsible for much of the mass of atoms.

Isotope

Atoms of the same element that have different numbers of neutrons, resulting in different masses but similar chemical properties.

Neutrons

Electrically neutral subatomic particles found in the nucleus of an atom, contributing to the atomic mass but not the atomic charge.