Peter Company purchases a machine during 2020 for $120,000. The machine is being depreciated on a straight-line basis over 20 years for financial accounting purposes (book) and over 15 years for tax purposes. At the end of 2020, depreciation expense for book purposes is $6,000 and for tax purposes is $8,000.

Required:
Should a temporary difference be recorded?

Transcribed Image Text:

Historical basis Depreciation to date Basis at balance sheet date Book basis $120,000 (6000) $114,000 Tax basis $120,000 (8000) $112,000