Your company purchases a forklift for $75,000. on January 1, 2016. You are the chief financial officer and you decide to depreciate it for financial statement purposes using the double declining balance method and MACRS for tax purposes, both over five years.

You are required by law to use MACRS.

a. calculate depreciation for financial statement purposes;

b. calculate depreciation for tax purposes;

c. there will be a difference between the two depreciation calculations and therefore your financial statement income will be different from your tax return income.. You will have two different calculations for net income before taxes and therefore two different amounts you derive for taxes. What balance sheet account would you use to record the difference in tax calculations.