Why Does the IRS Allow Larger Depreciation Amounts in the Early

question 28

Multiple Choice

Why does the IRS allow larger depreciation amounts in the early years of an asset's life?

• A)The calculations are easier if you allow more depreciation in the early years of an asset's life.
• B)The government wants to encourage companies to invest in assets to promote economic renewal and growth.
• C)So that most income taxes are paid by average taxpayers,rather than by big corporations.
• D)The calculations are more complicated,so it provides more jobs for accountants and thus stimulates the economy.

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Definitions:

Scatter Diagram

A graphical representation using dots to show the relationship between two sets of data, helping identify any correlation trends.

Break-Even Point

The point at which total revenues equal total expenses, meaning there is no profit or loss, and the business has covered all its costs.

Variable Cost

Charges that move in direct relationship with the quantity of goods produced or sold, embracing materials and labor expenses.

Units

Basic measures or quantities of product or service in business, used in accounting and production.