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Financial Reporting & Analysis
Financial Reporting & Analysis
Medium
Orion Manufacturing records $50,000 of depreciation expense on its financial statements but claims $100,000 of accelerated depreciation on its tax return. The tax rate is 25%. What is the deferred tax impact in Year 1?
A
A deferred tax liability of $12,500 is created
B
A deferred tax asset of $12,500 is created
C
A deferred tax liability of $50,000 is created
D
No deferred tax impact arises
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Tags
#deferred-tax-liability
#temporary-differences
#depreciation
#income-taxes
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CFA Level I — Financial Reporting & Analysis Practice Question | AcadiFi | AcadiFi