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welcome to accounting with audra this is part two in a series on asc 740 accounting for income taxes in this video we will discuss how to use a tax basis balance sheet to record and track temporary differences as well as the importance of valuation allowances and determining deferred tax asset amounts companies that are stuttered to us gaap generally have numerous different assets and liabilities on their financials many of which are valued differently for book versus tax thanks to different recognition principles between us gaap and the internal revenue code a useful way to track and record all deferreds is by using a tax basis balance sheet lets start by reviewing the example discussed in part one we have a newly purchased truck valued at a hundred thousand dollars the truck is depreciated for u.s gaap using straight line convention over five years and for tax using 50 bonus depreciation in year one and then straight line over years t through five evaluating deferreds using a singl