Why Do Many Companies Use One Method to Calculate Depreciation

question 20

Essay

Why do many companies use one method to calculate depreciation for the income statement developed for stockholders and another method for income tax purposes?

---

Definitions:

Moving Average

A statistical measure used to analyze data points by creating a series of averages of different subsets of the full data set.

Cost Of Goods Sold

Represents the direct costs attributable to the production of the goods sold in a company.

Total Inventory Cost

The complete cost associated with purchasing or producing inventory, including purchase price, conversion costs, and other costs.