Deferred Tax Question

duhduhduh's picture
Rank: Chimp | 10

Why would an asset write-up create a DTL?

When we have an asset write-up, dep expense goes up.

Tax method: using accelerated dep method, we will have a higher dep expense incurred (vs. GAAP - straight line method). Therefore, under tax method, we will pay less tax in cash in the beginning.

Is my reasoning right? Sorry a bit messy here.

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Feb 2, 2012