In most cases,the depreciation method chosen for financial reporting purposes (GAAP)must also be utilized for income tax reporting (IRS).

Question

Quizplus · Accepted Answer

For financial reporting purposes, companies often use the straight-line method of depreciation, but for tax purposes, they might use an accelerated depreciation method, such as the Modified Accelerated Cost Recovery System (MACRS), to maximize tax deductions in the early years of an asset's life. The IRS allows different methods for tax reporting than what is used for financial reporting under Generally Accepted Accounting Principles (GAAP).

In Most Cases,the Depreciation Method Chosen for Financial Reporting Purposes