10. Why would a business select an accelerated method of depreciation for tax pu

Question

10. Why would a business select an accelerated method of depreciation for tax purposes? a. Accelerated depreciation generates higher depreciation expense immediately and therefore lowers tax payments in the early years of the asset's life. b. MACRS depreciation follows a specific pattern of depreciation. c. Accelerated depreciation is easier to calculate because salvage value is ignored. d. Accelerated depreciation generates a greater amount of depreciation over the life of the asset than does straight-line depreciation.

Explanation / Answer

Solution: Accelerated depreciation generates higher depreciation expense immediately, and therefore lowers tax payments in the early years of the asset’s life

Explanation: Explanation: An approved accelerated tax method of depreciation will allocate more cost in the earlier years of useful life and results in lower taxes. For accounting goals, the target of depreciation is to properly allocate the cost of the plant asset to the accounting periods benefited

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