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Accelerated depreciation is method in which double rate for depreciation is used as compare to straight line method.
Accelerated depreciation allows a company to take a higher upfront depreciation expense. Higher depreciation means a lower profit, and lower taxes to pay.
benefits of accelerated depreciation #provide a greater tax shield effect than other methods (SL or UOP). #Higher cash flow and lower maintenance costs when equipments are in good condition
Advantages: Easy to use Matches Cost to revenues (Matching Concept) Disadvantages: Depreciation can not be charged when the Asset is not in use.
Presumably you mean when doing tax accounting. Depreciation is an expense. Expense lowers income, which lowers the tax payable. However, as the same amount of depreciation will be taken on an asset overall, accelerated only meaning a larger amount is taken quicker...in latter years the benfit reverses...that is the amount of book (or non accelerated depreciation) is higher than the accelerated one, and less tax expense is received. hence, the difference is to lower taxable income at first and increase it later...providing cash (less tax) sooner, and requiring more cash later. So the time value of the cash savings sooner is the real benefit.
Accelerated depreciation is method in which double rate for depreciation is used as compare to straight line method.
Accelerated depreciation allows a company to take a higher upfront depreciation expense. Higher depreciation means a lower profit, and lower taxes to pay.
There are many reasons that a company may consider using accelerated depreciation. The main reason being that by using accelerated depreciation, this would decrease their tax payments.
Before or after accelerated depreciation?
An advantage of depreciation is being able to have a tax deduction. A disadvantage is not being able to calculate the rate of depreciation for each year.
According to their annual report, Target generally uses the accelerated depreciation method.
benefits of accelerated depreciation #provide a greater tax shield effect than other methods (SL or UOP). #Higher cash flow and lower maintenance costs when equipments are in good condition
approximately 12.4786994598 exceeding
Advantages: Easy to use Matches Cost to revenues (Matching Concept) Disadvantages: Depreciation can not be charged when the Asset is not in use.
Presumably you mean when doing tax accounting. Depreciation is an expense. Expense lowers income, which lowers the tax payable. However, as the same amount of depreciation will be taken on an asset overall, accelerated only meaning a larger amount is taken quicker...in latter years the benfit reverses...that is the amount of book (or non accelerated depreciation) is higher than the accelerated one, and less tax expense is received. hence, the difference is to lower taxable income at first and increase it later...providing cash (less tax) sooner, and requiring more cash later. So the time value of the cash savings sooner is the real benefit.
Modified Accelerated Cost Recovery System
Presumably you mean when doing tax accounting. Depreciation is an expense. Expense lowers income, which lowers the tax payable. However, as the same amount of depreciation will be taken on an asset overall, accelerated only meaning a larger amount is taken quicker...in latter years the benfit reverses...that is the amount of book (or non accelerated depreciation) is higher than the accelerated one, and less tax expense is received. hence, the difference is to lower taxable income at first and increase it later...providing cash (less tax) sooner, and requiring more cash later. So the time value of the cash savings sooner is the real benefit.