Accelerated Depreciation Has an Advantage for Profitable Firms in That

question 62

True/False

Accelerated depreciation has an advantage for profitable firms in that it moves some cash flows forward, thus increasing their present value.On the other hand, using accelerated depreciation generally lowers the reported current year's profits because of the higher depreciation expenses.However, the reported profits problem can be solved by using different depreciation methods for tax and stockholder reporting purposes.

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Definitions:

Internal User

individuals within an organization who use financial information to make decisions, including managers and employees.

Accounting Data

Information and records relating to the financial activities of a business, including transactions, balances, and other financial statements.

Labour Union

An organization that represents the collective interests of workers in negotiations with employers over wages, working conditions, and other employment terms.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.