Methods of accelerated depreciation:
A) allow more depreciation over the asset's life.
B) decrease the depreciation tax shield.
C) increase the depreciation tax shield.
D) allow assets to be depreciated more rapidly.

Question

Quizplus · Accepted Answer

Methods of accelerated depreciation allow assets to be depreciated more rapidly than traditional methods. This can provide a greater tax benefit in the early years of the asset's life, but may result in a lower tax benefit in later years. Therefore, choice D is the best answer. Choices A and C both indicate an increase in the depreciation tax shield, which is true, but not as specific to accelerated depreciation methods. Choice B is incorrect because accelerated depreciation methods actually increase the depreciation tax shield.

Methods of Accelerated Depreciation