Bubba IncPurchased an Asset on January 1,20A

question 51

Multiple Choice

Bubba Inc.purchased an asset on January 1,20A.Bubba chose the straight-line method to depreciate the asset.Had Bubba chosen an accelerated depreciation method,which of the following would be false?

• A)Depreciation expense would be greater in 20A.
• B)The book value of the asset would be less at the end of 20A.
• C)Profit would be less in 20A.
• D)Depreciation expense would be the same each year.

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Definitions:

Interperiod Tax Allocation

An accounting technique that aims to match taxes paid with the revenues causing the tax, over periods affected by timing differences in recognizing certain items for tax and accounting purposes.

Net Income

The amount of money a company earns after deducting all its expenses, taxes, and losses from its total revenue.

Prior Period Adjustments

Prior period adjustments are corrections made to a company's financial statements for errors or omissions in previously reported periods.

Comprehensive Tax Allocation

A method of accounting that allows for the recognition of deferred tax liabilities and assets for future tax consequences of events that have been recognized in a business's financial statements or tax returns.