Why company uses accelerated depreciation methods-income tax

Reference no: EM13256851

The following is a note accompanying a financial statement of International Paper Company:

Plant, Property, andEquipment

Plant, Properties, and Equipmentare stated at cost less accumulated depreciation. For financialreporting purposes, the company uses the units-of-production methodof depreciating its major pulp and paper mills and certain woodproducts facilities, and the straight-line method for other plansand equipment.

Annual straight-line depreciationrates for financial reporting purposes are as follows:

• Building2.5 % to 8%
• Machineryand Equipment 5% to 33%
• Woodsequipment 10% to 16%

Fortax purposes, depreciation is computed utilizing acceleratedmethods.

Required:

Are the depreciation methods used in the company's financial statements by current income tax laws? If not, who is responsible for selecting these methods?
Does the company violate the consistency principle by using differentdepreciation methods for its paper mills and wood productsfacilities than it uses for its other plan and equipment? If not,what does the principle of consistency mean? Explain
What is theestimated useful life of the machinery and equipment beingdepreciated with a straight-line deprecation rate of:
2. i. 5%
3. ii.33%
Who determines the useful lives over which specific assets are to be depreciated?
Why do you think the company uses accelerated depreciation methods for income tax purposes, rather than using the straight-line method?

Reference no: EM13256851

Questions Cloud

Calculate the cost of purchasing the equipment : Thomas Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30%. Calculate the cost of purchasing the equipment.

Calculate the rate of heat addition : You may solve this problem using either tabulated values from the tables or constant specific heats. Calculate the rate of heat addition

Efficiency and effectiveness of the two companies : J-mart and Buy-Lo are two companies that sell identical products. They are located in different parts of the same city. During September, J-mart sold $25,000 of goods, while Buy-Lo sold $19,000.J-mart's profit was $9,000, and Buy -Lo profit was $3..

Which one is more important to joe : Joe Martinez, a U.S. citizen living in Brownsville, Texas, invested in the common stock of Telmex, a Mexican corporation. he purchased 1,000 shares at 20.50 pesos per share. Twelve months later, he sold them at 24.75 pesos per share. He receive..

Why company uses accelerated depreciation methods-income tax : Why do you think company uses accelerated depreciation methods for income tax purposes, rather than using straight-line method?

Case-soft light company : Soft Light Company produces speciality lamps and sell them to retail stores. During the lastest year, the company sold 40,000 lamps at an average of $70 per lamp.

Calculate the solubilities and the mass of solid crystals : calculate the solubilities (g A/100 gS) at 10.2 degrees C and 0 degrees C and the mass of solid crystals in the breaker at 0 degrees C. and if you have the time, I'd really appreciate help with:

Describes your likely position after the split : Troll Brothers' stock, which currently sells for $120 a share. The company is about to declare a 2-for-1 stock split. Which of the following best describes your likely position after the split?

Find an expression for the loops velocity : Find an expression for the loop's velocity as a function of time as it enters the magnetic field. You can ignore gravity, and you can assume that the back edge of the loop has not entered the field

User Account

All Pages