1 Which of the following best explains why many countries do not allow depreciation t be treated as an expense for tax purposes? A B D Depreciation is not a real expense. The calculation of depreciation allows too much discretion. The tax treatment of depreciation maximises the revenue from corporate tax There is no relationship between depreciation and cash flows. Why might a manufacturing company's return on capital employed be overstated during times of inflation? A B D Competitors will increase selling prices. Depreciation on property, plant and equipment may be understated. Employee wages will decline in spending power. Sales revenue will be overstated