An accrual-basis c corporation that prepared its financial statements based on gaap recorded $800,000 of bad debt expense. the total amount of bad debts that actually became worthless was $930,000. in respect to bad debt expense, what type of disclosure should the corporation show on schedule m-3

Complete Question:

A.A permanent bad debt expense difference of $130,000.

B.A temporary difference in which book deductions exceed tax deductions by $130,000.

C.A temporary difference in which tax deductions exceed book deductions by $130,000.

D.No difference between bad debt expense per income statement and deduction per tax return.

C.A temporary difference in which tax deductions exceed book deductions by $130,000.

Explanation:

As the book bad debt was $800,000 and the actual bad debt was $930,000. One can clearly see a difference of $130,000 and this is the amount which the book bad debt is increasing by. In this case of tax, bad debts becomes worthless in the year they are announced collectible.