For 2013, the Oscar Company Records Depreciation Expense of $12,000

Multiple Choice

For 2013, The Oscar Company records depreciation expense of $12,000 on its income statement and $9,000 of MACRS depreciation on its tax return. Which of the following answers is correct regarding the difference between the two figures?

A) Net income is understated by $3,000 on the 2013 income statement.
B) The difference in depreciation expense is caused by differences between GAAP and the tax code.
C) Deferred taxes of $3,000 are subtracted from taxable income of 2013.
D) The amount of depreciation recorded on the income tax return must be incorrect.