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- Title
EFFECTS OF ACCELERATED DEPRECIATION ON BUSINESS DECISIONS.
- Authors
Schindler, James S.
- Abstract
The article focuses on the effect of accelerated depreciation on business decision. In the years immediately following World War II, considerable pressure was brought to bear for a change in an antiquated tax depreciation policy. The Internal Revenue Code of 1954 finally provided a degree of liberalization. This allowed for the first time the general tax use of the declining-balance, sum-of-the-years'-digits, and similar methods in the determination of taxable income. Briefly, such "accelerated depreciation" permitted the tax-free recovery of two-thirds an asset's cost in one-half its life. Within this framework, accelerated depreciation was designed to assist modernization and to promote industrial expansion, which in turn would foster increased production and a higher standard of living. While the skeptic might view this as a rationalization of a tax favor to the business sector, it was clear that many considered the new depreciation methods a promising means of stimulating investment. In brief, it was concluded that while the stimulus of prospective tax savings does exist, it is so small as to be dwarfed into insignificance by other parameters typical of business investment planning.
- Subjects
DEPRECIATION; BUSINESS; DECISION making; ACCOUNTANTS; TAXATION; INVESTMENTS; BUSINESS planning
- Publication
Accounting Review, 1959, Vol 34, Issue 4, p616
- ISSN
0001-4826
- Publication type
Abstract