The adjustment for the amount of future taxes to be paid as a result of the MACRS depreciation deduction taken in this and prior years is recorded with:

Question

Quizplus · Accepted Answer

The adjustment for future taxes due to MACRS depreciation results in a temporary difference between the book and tax bases of assets. This difference creates a deferred tax liability, not an asset, because it represents future tax payments. Therefore, the correct entry is a debit to Tax Expense (increasing expense) and a credit to Deferred Income Tax Liability (recognizing the future obligation).

The Adjustment for the Amount of Future Taxes to Be