Chapter 9, Problem 5E

a)

To determine

Identify whether the company violating the consistency principle of accounting by using different depreciation methods in its financial statements than in its income tax returns and explain the same.

b)

To determine

Explain the reasons that the Company L uses accelerated depreciation methods in its income tax returns.

c)

To determine

Explain whether the use of accelerated depreciation method in the financial statements be more conservative or less conservative than the current practice of straight line method.