63. At the beginning of the year a company purchased a fixed asset for $500,000 with no
expected residual value. The company depreciates similar assets on a straight-line basis
over 10 years, while the tax authorities allow declining balance depreciation at the rate of
15% per year. In both cases the company takes a full year’s depreciation in the first year
and the tax rate is 40%. Which of the following statements concerning this asset at the
end of the year is most accurate?
A. The tax base is $500,000.
B. The deferred tax asset is $10,000.
C. The temporary difference is $25,000.
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