Many companies use MACRS (Modified Accelerated Cost Recovery System) depreciation for
A) financial reporting purposes and a different method for tax purposes.
B) financial reporting purposes because depreciation is not allowed for tax purposes.
C) tax purposes because it results in a larger net income in the early years of a plant asset's life
D) tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes.

Question

Quizplus · Accepted Answer

MACRS is used for tax purposes to allow businesses to recover the cost of an asset over a specified life span through depreciation deductions. By accelerating depreciation, companies can report higher expenses in the early years of an asset's life, which reduces taxable income and, consequently, taxes owed.

Many Companies Use MACRS (Modified Accelerated Cost Recovery System) Depreciation