Using Straight-Line Depreciation for Financial Reporting Purposes and MACRS for Tax

question 1

Multiple Choice

Using straight-line depreciation for financial reporting purposes and MACRS for tax purposes in the first year of an asset's life creates a:

• A) Future deductible amount.
• B) Permanent difference not requiring inter-period tax allocation.
• C) Deferred tax asset.
• D) Deferred tax liability.

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Definitions:

Future Studies

An interdisciplinary field that seeks to anticipate and analyze possible, probable, and preferable futures.

Scientific Hypothesis

A testable prediction or explanation for a specific phenomenon, based on observation, reasoning, or existing scientific knowledge, serving as a starting point for further investigation.

Disproved

Shown to be false or incorrect through evidence or logical argument.

Proved

Demonstrated to be true or established with evidence.