Which of the following creates a temporary difference between financial and taxable income?

Question

Quizplus · Accepted Answer

Accelerated cost recovery on plant and equipment creates a temporary difference between financial and taxable income because of differences in depreciation. The accelerated depreciation methods used for tax purposes result in higher deductions for tax purposes than for financial reporting purposes in the early years of an asset's life, resulting in lower taxable income. However, over the asset's life, the total depreciation expense will be the same for both financial and tax purposes.

Which of the Following Creates a Temporary Difference Between Financial