Gillock, Incorporated Uses Modified Accelerated Cost Recovery System (MACRS)for Its

question 125

Multiple Choice

Gillock, Incorporated uses modified accelerated cost recovery system (MACRS) for its income tax return and the straight-line method for its financial statements. On January 1, Year 1, the company purchased a long-term asset that cost $130,000 and has a $10,000 salvage value and an expected 8-year useful life. MACRS specifies a 5-year life for that asset and a depreciation rate of 20% for the first year of its life. Which of the following would the company show on its financial records?

• A)Less depreciation expense on the tax return than on the income statement
• B)The same amount of depreciation expense for financial reporting as for income tax preparation
• C)Depreciation expense of $26,000 on the income statement and $15,000 on the tax return
• D)A deferred tax liability will be reported on the balance sheet

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Definitions:

Connective Tissue

A type of body tissue that supports, connects, or separates different types of tissues and organs in the body.

Muscle Fibers

The elongated cells or fibers that makeup skeletal muscles, responsible for contracting and generating force.

Endomysium

A thin layer of connective tissue that surrounds each muscle fiber, providing structural support and facilitating nutrient exchange.

Perimysium

A sheath of connective tissue that groups muscle fibers into bundles or fascicles within skeletal muscles.