Davison Company Determined That the Book Basis of Its Net

question 26

Multiple Choice

Davison Company determined that the book basis of its net accounts receivable was less than the tax basis of its net accounts receivable by $800,000 due to a difference in the allowance for bad debts account. This basis difference is characterized as:

• A) Favorable permanent difference.
• B) Unfavorable permanent difference.
• C) Deductible temporary difference.
• D) Taxable temporary difference.

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