Many companies use accelerated depreciation in computing taxable income because:
A)It is required by the tax rules.
B)It is required by financial reporting rules.
C)It postpones tax payments until later years and the company can use the resources now to earn additional income before payment is due.
D)Using it causes a company to use higher income in the early years of the asset's useful life.
E)The results are identical to straight-line depreciation.

Question

Quizplus · Accepted Answer

Accelerated depreciation allows a company to defer tax payments to later years, which allows them to use the resources now to earn additional income before payment is due. This can be beneficial for a company's cash flow and overall financial strategy.

Many Companies Use Accelerated Depreciation in Computing Taxable Income Because