For tax reporting purposes, companies typically transfer more of the assets cost from the balance sheet to the income statement in the earlier years of the assets life. This is called accelerated depreciation. For financial reporting purposes, companies generally record depreciation expense evenly throughout the asset's life. Using accelerated depreciation for tax purposes, reduces taxable income in early years and defers taxes to later years. This is a desirable outcome for companies. Below is a chart of depreciation on a $100,000 machine owned by Company A.. The chart summarizes amounts deducted for financial statement purposes and tax reporting purposes by Company A.

	Financial statement reporting (Straight-line)	Tax reporting (Accelerated)
Yr1	20,000	40,000
Yr2	20,000	24,000
Yr3	20,000	14,000
Yr4	20,000	11,000
Yr5	20,000	11,000
Total	100,000	100,000

Company A would record a record deferred tax asset in Year 1 in this situation.

True

False