Answered: Why do many companies use one method to…

Why do many companies use one method to calculate depreciation for the income statement prepared for external reporting and and another method for income tax purposes

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 12Q

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Question

Why do many companies use one method to calculate depreciation for the income statement prepared for external reporting and and another method for income tax purposes?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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