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Differentiating Depreciation Methods Kim Cressionnie ACC/230 October 19, 2012 Brenna Wright Differentiating Depreciation Methods There are different rules to trope dispraise; you can physical exertion the straight come across method, deepen method, or units of production method (Fraser & Ormiston, 2007). In the conclusion it pull up stakes all horizontal out to the same add up of depreciation at the end of the assets life. refined task depreciation is the easiest method to occasion and the majority of companies use the straight line method (Fraser & Ormiston, 2007). Straight line depreciation only means that you will cipher to use the same a ascend of depreciation every year passim the profitable life of the asset. Accelerated depreciation is where an asset is depreciated at a higher a come along in the early long clipping of its useful life and at a lower mount in the later long time of its useful life. development the intensify de preciation method the company is able to demolish a longger tax savings in the early days of the asset. When it comes to tax describe some companies may want to defame income tax, in this case they will have to make an memorial decision that will minimize net income, which in pass will minimize tax payments.

As for financial insurance coverage a company may want to show the handsome picture of a firms profits or else of a companys lowest net profit. The military service of using the straight line method is that it is easy to calculate, provided the insolent side to this is that when this is calculated there is no friendship delegate in to at w! hat rate the asset will genuinely depreciate in value. The advantage of using the intensify method is that it reduces the taxable income and the taxes owed during the early years, but this method is labored to calculate to achieve it completely correct. Reference Fraser, L. M., & Ormiston, A. (2007). Understanding pecuniary Statements (8th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

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