Which of the following statements concerning deferred taxes is correct?
A) Deferred taxes will not be found in asset section of the balance sheet.
B) Deferred taxes arise from permanent differences in GAAP and tax accounting.
C) Deferred taxes will only decrease when a cash payment is made.
D) Deferred taxes arising from the depreciation of a specific asset will ultimately reduce to zero as the item is depreciated.

Question

Quizplus · Accepted Answer

Deferred taxes arising from temporary differences, such as depreciation, will eventually reverse and reduce to zero as the asset is fully depreciated and the differences between book and tax depreciation are eliminated.

Which of the Following Statements Concerning Deferred Taxes Is Correct