What are the differences between the straight line method of depreciation and the accelerated methods? Why do companies use different depreciation methods for tax reporting and financial reporting? What are the advantages and disadvantages of using differ (2024)

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• Explain why firms prefer to use accelerated depreciation methods over the straight-line method for tax purposes.
• Why don't all companies use the same depreciation method? (a) US income tax regulations require that a company uses the same depreciation method for both financial reporting and income taxes (b) Different depreciation methods might better reflect the patt
• Describe the difference between depreciation methods: Straight-line and Double Declining Balance
• Why would a firm use a depreciation method on its federal income tax return that is different from the method used on its financial statements?
• Since depreciation does not affect cash, except for when dealing with the tax advantage, other than tax reasons, why should companies include depreciation expense in their income statements that they
• 1) What are at least four depreciation methods that are available to a company? 2) What are their similarities and differences? 3) Why does a company select one method over another?
• What are the effects on the income statement of using the straight-line method of depreciation compared to the declining-balance method?
• Discuss the differences between the different methods of depreciation.
• Explain the purpose of depreciation and compare different methods of accounting for it.
• Explain the concept of depreciation. Which of the following depreciation methods would you recommend: straight-line depreciation, double declining balance method, or an alternative method?
• List the major methods for calculating depreciation of a fixed asset and compare and contrast the various depreciation methods mentioned in the material. Why is one method more appropriate than another for the recording of depreciation of a certain asset
• Why would a firm choose one depreciation method over another? What are the advantages of each method?
• Why does the use of the accelerated depreciation method (instead of a straight line) for income tax reporting increase an investment's value?
• Compare and contrast the methods that can be used in accounting for investments. How does a company choose a method? What are the advantages and disadvantages of each?
• 1. Compare and contrast the methods that can be used in accounting for investments. 2. How does a company choose a method? 3. What are the advantages and disadvantages of each?
• What are the different methods used, to calculate depreciation? How does a company decide which method they should utilize? How does their choice affect the financial statements?
• How does tax depreciation differ from financial accounting depreciation?
• Why do we have various methods of depreciation? Explain.
• How financial statement ratios are affected by the choice of depreciation methods? Take specific attention to the effects of straight-line vs. accelerated depreciation on the ratios.
• What are some benefits and risks of various depreciation methods on a company's net income?
• Which method is more conservative: the accelerated depreciation method or the straight-line depreciation method? Explain.
• Explain what companies should consider before choosing a method of expensing long-lived assets cost. With that said, explain what some of the benefits and risks of various depreciation methods would be on a company's net income.
• Why would a business select an accelerated method of depreciation for tax purposes? a. MACRS depreciation follows a specific pattern of depreciation. b. Accelerated depreciation generates a greater amount of depreciation over the life of the asset than
• I have had a lot of different clients and all of them have used straight line depreciation because it is the easiest to understand and explain. a. When should a company chose another method and why? b. What method does your company or a company you are
• Explain the differences between depreciation expense and the accumulated depreciation.
• What are the different methods used to calculate depreciation? How does a company decide which method it should utilize? How does its choice affect the financial statements? Should companies standardi
• Describe the difference between depreciation expense and accumulated depreciation. Describe the formula used for computing the straight line depreciation for a depreciable asset. Explain how to calculate an asset's book value.
• Why would you use different depreciation methods for different assets?
• Why is an accelerated depreciation method often used for income tax purposes?
• Which of the following depreciation methods is used by most companies for their tax returns? a. Units-of-production b. Straight-line c. Declining-balance d. All of the above methods are used about equally.
• Why does income statement and cash flow statement depreciation and amortization differ?
• List (a) the similarities and (b) the differences in the accounting treatments of depreciation and cost depletion.
• How does the MACRS system differ from depreciation systems used for accounting (GAAP) purposes?
• What are the advantages and disadvantages of using measures such as operating income before depreciation (OIBD) or earnings before interest, taxes, depreciation, and amortization (EBITDA) rather than
• Explain the straight-line depreciation method and the double-declining balance method.
• Why are differences in reported amounts for deferred taxes among the most frequent between the IFRS and the U.S., despite the fact that the two follow similar approaches for accounting for taxation?
• Explain the two methods to amortize the bond premium and discount. Give example journal entries for the two different amortization methods.
• Which of the following method of depreciation provide a lower amount? a. Straight line method. b. Written down method. c. None of the above. d. All of the above.
• Why does changing the depreciation method (i.e. changing the depreciation numbers in the financial statements) change the debt-to-equity ratio?
• Evaluate the advantages and disadvantages of depreciation as an accounting concept.
• How do depreciation expense and accumulated depreciation differ?
• What are the advantages and disadvantages in using measures such as operating income before depreciation (OIBD) or earnings before interest, taxes, depreciation, and amortization (EBITDA) rather than net income in comparing profitability across foreign co
• For-profit organizations can use different methods for reporting depreciation to owners and to the government (for tax purposes). What is the practical effect of this allowance?
• Write and explain difference between depreciation on the income statement and depreciation on the balance sheet.
• Why are depreciation methods important in accounting?
• Discuss the differences between the indirect and direct methods of preparing the statement of cash flows. What do you believe are the most significant advantages and disadvantages of using each method?
• Why would a company decide to change its depreciation, depletion, or amortization method?
• Explain what is meant by an accelerated depreciation method. Are accelerated methods more widely used in financial statements or in income tax returns? Explain.
• What depreciation methods might be used for the computer system? Describe the advantages and disadvantages of each.
• What is the difference between depreciation expense and accumulated depreciation? Why does the book value of an asset never go below the residual value?
• An accelerated system of depreciation is often used for income tax purposes but not for financial reporting. Why?
• Explain how to calculate and record depreciation expense under the straight-line method.
• How does the straight-line method of depreciation work?
• How does the accrual method for tax reporting differ from the accrual method for financial reporting?
• Is it appropriate to calculate depreciation using two different methods? Explain why or why not.
• Lynch Corporation changes from the sum-of-the-year's-digits method of depreciation for existing assets to the straight-line method. How should the change be reported? Explain.
• Explain the similarities and dissimilarities between depreciation, amortization, and depletion. Describe the cost recovery method used for each of the four asset types (personal property, real property, intangible property, and natural resources).
• Identify and describe in details the different methods available when making reporting decisions for accounting for uncollectible receivables (bad debts). Explain the advantages and disadvantages of each method.
• What are the similarities and differences of depreciation and amortization?
• What are the similarities and differences between depreciation and amortization?
• Which of the following depreciation methods is not an accelerated method? a. Straight-line b. Double-declining balance c. Sum-of-the-years' digits
• What are the differences between valuation, depreciation, amortization, and depletion?
• What are the differences among valuation, depreciation, amortization, and depletion?
• Is it appropriate to calculate depreciation using two different methods? Why or why not?
• (a) Explain how to compute and record depreciation using the various methods. (b) Provide three examples.
• What method(s) of depreciation does Apple use? Does the company use the same method of depreciation for all types of long-lived assets? Where did you find this information?
• Name five financial reporting implication differences resulting from the use of the cash method versus the accrual basis of accounting.
• Why do people use straight line depreciation instead of double declining balance?
• Discuss the primary advantages and disadvantages of applying the direct write-off and the allowance method of writing off accounts. Even though the direct write-off method is not acceptable for generally accepted accounting principles (GAAP) reporting, ta
• Why do we have various methods of depreciation? Isn't that encouraging misleading results?
• What is the tax advantage of an accelerated depreciation method?
• Why is the income statement's depreciation disparate from the balance sheet's depreciation?
• Describe the differences between revenues and gains. Also, distinguish between expenses and losses. Explain why these items are usually disclosed separately on income statements.
• Describe depreciation, amortization, and depletion. How do they differ?
• What are the advantages and disadvantages of using either cash or accrual basis of accounting? Why might a company be able to justify in using cash or accrual basis of accounting? Give examples
• Briefly explain the differences between the terms, depreciation, depletion, and amortization.
• Define Depreciation. Explain its significance. Elucidate the factors that affect depreciation. Explain its effect on Profit and Loss Account as well as Balance Sheet.
• Compare and contrast the different tax implications that a stock redemption has on a stockholder versus the tax implications that the redemption has on the corporation. Explain using examples.
• Discuss the implications of the different assumptions used in calculating depreciation. What effect does changing these assumptions have on the balance sheet and income statement?
• 1. Discuss capital budgeting techniques including the Payback Rule, IRR, NPV, and the Profitability Index. Discuss the advantages and disadvantages of each one. 2. Give an example of each capital budgeting technique above using your own numbers includin
• Why would a company choose units-of-production depreciation instead of straight-line?
• What are the disadvantages of using the payback method as a capital budgeting technique? What are the advantages? Why is it used so frequently?
• Write and explain all depreciation methods.
• Why companies preferred the allowance method over the direct write off method of accounting for bad debts?
• Why does income statement depreciation not match cash flow statement depreciation?
• (a) Explain the incremental and zero-based approaches to budgeting. (b) Briefly outline the key advantages and disadvantages of each. (c) Is one approach better than the other? (d) Is one approach more commonly used than the other?
• Discuss the pros and cons of using the payback method, as opposed to the net present value method of planning for capital projects.
• What is the difference between the cash basis method versus the accrual method in accounting?
• Contrast the advantages and disadvantages of the direct and indirect methods of preparing the statement of cash flows.
• What is the affect that depreciation methods have on net income and on book value?
• Why are there differences between taxable and financial income? What are some examples of permanent and temporary differences? Why do these differences exist? How do they affect the financial statements?
• 1. Describe the purpose of depreciation (or cost recovery) deductions. 2. Give an example of how it benefits a company.
• a) How is depreciation expense handled when the direct method is used? b) How is depreciation expense handled when the indirect method is used?
• How does the reporting of revenues from taxes differ from a for-profit company's recording of revenues and uncollectible accounts?
• What is goodwill? How do publicly traded companies account for its value over time? Consider the matching principle. Make an argument for why this treatment is inappropriate. And how are depreciation, depletion, and amortization the same? How are they dif
• Under what category of accounting changes is the change from the sum-of-the-years'-digits method of depreciation to the straight-line method for previously recorded assets classified? Under what circ*mstances does this type of accounting change occur?
• Do you think it would be better to require all companies to use the same depreciation method? Explain?
• Describe the difference between cash-basis and accrual-basis accounting, and explain which method is consistent with GAAP.