Many companies use accelerated depreciation in computing taxable income because
A) is required by the tax rules.
B) is required by financial reporting rules.
C) the results are identical to straight-line deprecation.
D) it postpones tax payments until later years because it lowers taxable income in the early years.

Question

Quizplus · Accepted Answer

Many companies use accelerated depreciation because it allows them to lower their taxable income in the early years and postpone tax payments until later years. This is beneficial for companies because it provides them with more cash flow in the short term, which they can use for investing or other expenses. Accelerated depreciation is not required by tax or financial reporting rules, and while it may result in different depreciation expense amounts than straight-line depreciation, the ultimate tax liability is the same.

Many Companies Use Accelerated Depreciation in Computing Taxable Income Because