Answered step by step
Verified Expert Solution
Question
1 Approved Answer
9.5 A recent annual report of H. J. Heinz Company includes the following note: Depreciation: For financial reporting purposes, depreciation is provided on the straight-
9.5 A recent annual report of H. J. Heinz Company includes the following note: Depreciation: For financial reporting purposes, depreciation is provided on the straight- line method over the estimated useful lives of the assets, which generally have the following ranges: buildings 40 years or less; machinery and equipment 15 years or less; computer software 3 7 years; and lease hold improvements over the life of the lease, not to exceed 15 years. Accel-erated depreciation methods are generally used for income tax purposes. a. Is the company violating the accounting principle of consistency by using different deprecia-tion methods in its financial statements than in its income tax returns? Explain. b. Why do you think that the company uses accelerated depreciation methods in its income tax returns? c. Would the use of accelerated depreciation in the financial statements be more conservative or less conservative than the current practice of using the straight- line method? Explain
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started