Asked by
Katie Lyons
on Dec 01, 2024Verified
Most firms choose accelerated depreciation for tax accounting because:
A) reported net income is higher.
B) tax payments are made sooner, resulting in a lower deferred tax liability.
C) operating expenses are correspondingly reduced.
D) income taxes are deferred.
Accelerated Depreciation
Any method that shifts depreciation forward in an asset’s life. Accelerated methods increase early charges and reduce those that come later, keeping total depreciation constant.
Tax Accounting
A method of accounting that focuses on taxes rather than the appearance of public financial statements.
Deferred Tax Liability
Deferred Tax Liability is a tax that is assessed or is due for the current period but has not yet been paid, often resulting from timing differences between book and tax deductions.
- Absorb the repercussions of taxation and depreciation on project financial flows.
Verified Answer
TC
Learning Objectives
- Absorb the repercussions of taxation and depreciation on project financial flows.