Why would a business select an accelerated method of depreciation for tax purposes?

a. Accelerated depreciation will result in higher gain on disposal of PPE than straightline depreciation.

b. Accelerated depreciation generates higher depreciation expense immediately, and therefore lowers tax payments in the early years of the asset’s life.

c. Accelerated depreciation is easier to calculate because salvage value is ignored.

d. Accelerated depreciation generates a greater amount of depreciation over the life of the asset than does straight-line depreciation.

11 A company purchased an oil well for $270,000. It estimates that the well contains 90,000 barrels, has an eight-year life, and no salvage value. If the company extracts and sells 10,000 barrels of oil in the fi rst year, how much depletion expense should be recorded?

a. $33,750

c. $27,000

b. $135,000

d. $30,000