AmStore Inc. sold some of its heavy machinery at a gain. AmStore used the straight-line method for financial accounting depreciation and expensing for tax cost-recovery. If accumulated depreciation for financial accounting purposes is less than accumulated depreciation for tax reporting purposes, what is the nature of the book-tax difference associated with the gain on the sale?

Multiple Choice

• Temporary; unfavorable.
• Permanent; favorable.
• Permanent; unfavorable.
• Temporary; favorable.