Question

Briefly, why would you want to choose an accelerated depreciation method over straight-line depreciation?

Answer 1

The most common reason for using accelerated depreciation is to reduce the net income. The biggest benefit of this method is the tax benefit. By writing off more assets against revenue, companies report lower income and thus pay less tax.

Accelerated depreciation shows less profit in the early years of asset acquisition.

Most companies use straight-line depreciation for financial statements and accelerated depreciation for income tax returns. This is permissible under GAAP guidelines.