APB #11

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10

• Company used accelerated depreciation.
  • The depreciation expense on the company’s books was $2,000.
  • The depreciation taken on the tax return was $4,250.
  • This gives rise to excess depreciation taken on the return of ($2,250), a timing difference. This difference is expected to reverse entirely in year 2, i.e., depreciation on the books will be greater than on the return by $2,250 in year 2.
• The company has vacation expense on the company books of $500. The amount deducted on the return was $200. This $300 timing difference is expected to entirely reverse in year 2.

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