The gain or loss on the disposal of a depreciable asset reported in financial statements often differs from that reported for income tax purposes. The principal reason for the difference is:

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The difference in gain or loss on disposal of a depreciable asset between financial reporting and income tax purposes is primarily due to the use of different depreciation methods. The method used for tax purposes is often accelerated depreciation, while financial statements typically use straight-line depreciation. This results in a difference in the amount of accumulated depreciation, which affects the reported gain or loss on disposal.

The Gain or Loss on the Disposal of a Depreciable