Which of the following is an accurate statement about book and tax depreciation methods?
A)Straight-line depreciation is the most popular method for income-tax purposes.
B)The IRS has their own set of rules to compute depreciation for income tax purposes.
C)The Modified Accelerated Cost Recovery System can be used for both book and tax purposes.
D)If an accelerated depreciation method is used for tax purposes,a company will pay more in income taxes.

Question

Quizplus · Accepted Answer

The IRS has their own set of rules to compute depreciation for income tax purposes, which may differ from book depreciation methods. Choices A and C are partially correct but incomplete. While straight-line depreciation is commonly used for book purposes, the Modified Accelerated Cost Recovery System (MACRS) is used for tax purposes. Choice D is incorrect as an accelerated depreciation method can actually reduce a company's taxable income and lower their tax liability.

Which of the Following Is an Accurate Statement About Book