Wave Corporation is determining its income tax liability.It has one machine that cost $30,000 with a four-year life and no salvage value.Wave is using an accelerated depreciation method for tax purposes.For accounting purposes,Wave has decided to use the straight-line method.Which of the following statements is true?

Question

Quizplus · Accepted Answer

This is because Wave is using different methods of depreciation for tax and accounting purposes, which will result in a temporary difference in the amount of depreciation expense recognized for tax purposes compared to accounting purposes. This will ultimately result in a temporary difference between accounting income and income for tax purposes.

Wave Corporation Is Determining Its Income Tax Liability