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Problem 3: Fairoz Market Company had recorded $470,000 as revenues for the year 2020. Its overall operating expenses, excluding depreciation, were $255,000. The company bought
Problem 3: Fairoz Market Company had recorded $470,000 as revenues for the year 2020. Its overall operating expenses, excluding depreciation, were $255,000. The company bought a three doors-Fridge (Equipment) in 2020 for $180,000 that has $20,000 salvage value and is fully depreciated over four years. The company uses the accelerating method for financial reporting tax purposes and the straight-line method for tax purposes. It operates under the 35% tax bracket. 3. Will a deferred tax asset or liability be created as a result of the depreciation recorded for tax and financial reporting purposes? * O A) Deferred Tax Asset of amount $17,500 B) Deferred Tax Liability of amount $17.500 O C) Neither Deferred Tax Asset nor Deferred Tax Liability will be created. D) None of the above
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