A company acquired a new machine and immediately deducted the entire cost on its current income taxreturn because of favorable tax depreciation rules. The company uses straight-line depreciation for financialstatement purposes.Which outcome will result from this decision?O A decrease in taxes payable in future years as a result of temporary differencesO An increase in taxes payable in future years as a result of temporary differencesA decrease in taxes saved in future years as a result of permanent differencesO An increase in taxes saved in future years as a result of permanent differences

Deprecation is an accounting system used to allocate the cost of a palpable asset over its useful…

A company acquired a new machine and immediately deducted the entire cost on its current income tax return because of favorable tax depreciation rules. The company uses straight-line depreciation for financial statement purposes. Which outcome will result from this decision?

A company acquired a new machine and immediately deducted the entire cost on its current income tax return because of favorable tax depreciation rules. The company uses straight-line depreciation for financial statement purposes. Which outcome will result from this decision?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A company acquired a new machine and immediately deducted the entire cost on its current income tax
return because of favorable tax depreciation rules. The company uses straight-line depreciation for financial
statement purposes.
Which outcome will result from this decision?
O A decrease in taxes payable in future years as a result of temporary differences
O An increase in taxes payable in future years as a result of temporary differences
A decrease in taxes saved in future years as a result of permanent differences
O An increase in taxes saved in future years as a result of permanent differences

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