What Is the Objective of Any Accelerated Depreciation Method

question 20

Multiple Choice

What is the objective of any accelerated depreciation method?

• A) To recognize greater amounts of depreciation in the later years of an asset's life and smaller amounts in the early years
• B) To recognize greater amounts of depreciation in the early years of an asset's life and smaller amounts in the later years
• C) To recognize stable amounts of depreciation in both the early and in the later years of an asset's life
• D) To accelerate the computation of the depreciation expense by the accountants.

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Definitions:

AMT Adjustments

Modifications required under the Alternative Minimum Tax rules to calculate certain items of income and deductions differently than for regular tax purposes.

Tax Preferences

Certain types of income or deductions that receive preferential tax treatment, affecting the calculation of alternative minimum tax (AMT).

Passive Activities

Economic engagements, such as rental activities or businesses in which the taxpayer does not actively participate, often with specific tax rules.

Passive Losses

Losses incurred from business activities in which the taxpayer does not materially participate, often from real estate.