Why would a shorter depreciable life impact book value

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For a company using straight line, earnings will be higher (less depreciation). As for book value (or equity), it will be higher under a straight line method. As for depreciable life, a shorter life will cause a lower book value. Why would a shorter depreciable life impact book value?

Depreciation expense is calculated differently for tax purposes than for book purposes, which tends to lead to deferred tax liabilities. US GAAP allows the uses of both the straight-line and the double-declining depreciation methods. Let's assume we just establish a new manufacturing firm, what methods you think we can chose the straight-line or the double-declining depreciation methods.

Reference no: EM131820787

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