Goldfarb, Inc

Multiple Choice

Goldfarb, Inc. uses MACRS for its income tax returns and straight line depreciation for its financial statements. The company purchased 5 year MACRS property on January 1, 2013 that cost $65,000 and has a $5,000 salvage value and an expected 8 year useful life. Given a depreciation percentage of 20% for the first year for 5 year property, the company would show which of the following on its financial records?

A) a deferred tax liability.
B) the same amount of depreciation expense for financial reporting as for income tax preparation.
C) depreciation expense of $13,000 on the income statement and $7,500 on the tax return.
D) less depreciation expense on the tax return than on the income statement.