The present value of tax savings from depreciation is greater for straight-line depreciation than an accelerated depreciation method.

Question

Quizplus · Accepted Answer

Accelerated depreciation methods result in higher depreciation expenses in the early years of an asset's life, leading to greater tax savings upfront compared to the straight-line method, which spreads the depreciation evenly over the asset's useful life.

The Present Value of Tax Savings from Depreciation Is Greater