[Solved] A Recent Annual Report of H

Question 28
Essay

A recent annual report of H. J. Heinz Company includes the following note: Deprecialion: For financial reporting purposes, depreciation is provided on the straight-line method over the estimated useful lives of the assets. Accelerated depreciation methods generally are used for income tax purposes. a. Is the company violating the accounting principle of consistency by using different depreciation methods in its financial statements than in its income tax returns? Explain. b. Why do you think that the company uses accelerated depreciation methods in its income tax returns? c. Would the use of accelerated depreciation in the financial statements be more conservative or less conservative than the current practice of using the straight-line method? Explain.

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