Generally speaking,firms _____ of their capital assets.

Question

Quizplus · Accepted Answer

Firms usually prefer accelerated depreciation because it allows them to deduct a larger portion of the cost of the asset earlier, reducing their taxable income and thus their tax bill. This provides firms with a cash flow advantage as they can use the saved taxes for other purposes like investment or dividend payments. Straight-line depreciation, on the other hand, spreads the cost evenly over the life of the asset, resulting in smaller tax deductions, and consequently, less tax savings. Therefore, firms prefer accelerated depreciation over straight-line depreciation.

Generally Speaking,firms _____ of Their Capital Assets