AKP Ltd Depreciates a Non-Current Asset Using the Straight-Line Method

Multiple Choice

AKP Ltd depreciates a non-current asset using the straight-line method. Tax law stipulates that the asset should be depreciated using the reducing-balance method at 1.5 times the straight line rate. Under normal circumstances, which of the following statements is correct?

A) After year 1, the tax base of the asset exceeds the accounting base and will give rise to a deferred tax liability.
B) After year 1, the tax base of the asset is less than the accounting base and will give rise to a deferred tax liability.
C) After year 1, the tax base of the asset exceeds the accounting base and will give rise to a deferred tax asset.
D) After year 1, the tax base of the asset exceeds the accounting base and will give rise to a tax asset.