The Gain or Loss on the Disposal of a Depreciable

Multiple Choice

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:

A) The cost of the asset is different for financial reporting and income tax purposes.
B) The sales price of the asset is different for financial reporting and income tax purposes.
C) Different depreciation methods have been used in financial statements and in income tax returns.
D) The company has made an error because the same amount of gain or loss should appear in the income tax return as in the financial statements.