Explain How a Deferred Tax Liability Arises from Depreciation of Machinery

question 41

Essay

Explain how a deferred tax liability arises from depreciation of machinery and equipment.

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Definitions:

Brushes

Components made of conductive material that transmit electrical current between stationary wires and moving parts, often found in motors and generators.

Commutator

A rotary electrical switch in certain types of electric motors and generators that periodically reverses the direction of current flow through the rotor.

AC Generator

An alternator in a vehicle that converts mechanical energy into alternating current electricity to power electrical systems.

Diodes

Semiconductor devices that allow current to flow in one direction, often used in electronics to rectify, switch, or modulate signals.