Consider the following statements. Since money has a time value:
i. businesses will take tax deductions as early as possible.
ii. businesses will take tax deductions as late as possible.
iii. businesses will obtain a greater tax benefit by using the diminishing value method of depreciation.
Which of the above statements is/are correct?

Question

Quizplus · Accepted Answer

i. Taking tax deductions early allows businesses to benefit from the time value of money, as it reduces their tax liability sooner, freeing up cash for investment or other purposes. iii. The diminishing value method of depreciation accelerates depreciation expenses, leading to higher deductions in the early years of an asset's life, which aligns with the principle that money has a time value, providing a greater tax benefit upfront.

Consider the Following Statements