The use of accelerated depreciation
A) initially increases the firm's profits
B) initially decreases the firm's taxes
C) discourages investment in plant and equipment
D) increases expenses and decreases cash flow

Question

The use of accelerated depreciation​
A) ​initially increases the firm's profits
B) ​initially decreases the firm's taxes
C) ​discourages investment in plant and equipment
D) ​increases expenses and decreases cash flow

Quizplus · Accepted Answer

Accelerated depreciation allows a company to deduct more of the cost of an asset in earlier years of its useful life, resulting in lower taxable income and lower tax payments in those years. This decreases the firm's taxes initially.

The Use of Accelerated Depreciation​

The Use of Accelerated Depreciation