Do you agree?

Depreciation is a non-cash allowable expense when computing income. This will then reduce the amount of tax liability. The larger the depreciation expense, the lower the company's reported net income (or profit). Depreciation will generate cash flow by reducing the income tax amount payable by the company.Accelerated depreciation is any method ofdepreciationused for accounting or income tax purposes that allows greater depreciation expenses in the early years of the life of an asset. There are many types of depreciation that can be used by a company: straight line (expense amount is the same amount every year over the useful life of the asset), declining balance and double declining balance (larger amount expensed in the earlier years of an asset) ,units of production (based on total number of hours used or total number of units produced by the asset over its useful life), and sum of the years digits (remaining life of an asset is divided by the sum of the years and then multiplied by the depreciating base to determine the expense). Each of these methods can be used in a different way to help a company spare its cash flow. Depreciable property for company can include machines, vehicles, office buildings, equipment and computers.

Answer rating: 100% (QA)

I agree with the statement about depreciation Heres a breakdown of the key points Depreciation Nonca... View the full answer