medium · Financial Accounting accounting-cycle-financial-statements
A company uses the straight-line method for book depreciation but the Modified Accelerated Cost Recovery System (MACRS) for tax purposes. In the early years of an asset's life, MACRS depreciation is higher than straight-line depreciation.
What does this create on the balance sheet?
- Deferred tax asset
- Permanent difference
- Other comprehensive income
- Deferred tax liability
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