Question

Based on your understanding of depreciation and tax rates do you think that it makes sense for organizations to receive a tax benefit for depreciating capital assets? minimum 200 words

Answer 1

Ans : A organisation major investment used to be in a assets of a company like machinery,land and builduings,patients,copywrights etc and by deprecating on the same a company is able to make a provision for future replacement as well as expansion of its business in a better way and also helps in a better tax planning and act as a tax incentive for the capital intensive business like iron, automobiles etc which require heavy machinery and there revenue cycle is time based and helps them to sustain and compete with other firms in the market but while getting a tax incentive a company gets a obligation to oblige the accounting and depreciation method and rate if any being prescribed by the government authorities to follow so as to comply with the guidelines and receive the benefit on the same.

                                             On the other hand by creation of these assets a country gets benefit of maintaining and improving the assets quality it has , for the present and future production and research of new technology and help them to encourage the investors to invest in capital based firms as they have excess money in there hand and in turn it increases the demand and supply cycle in a economy which help in a economy with a efficiency on return on its capital,research and development helps in adoption of new technology and increase in the level of production.

Conclusion: So we can conclude that , tax incentive on depreciation help both the organisation as a individual as well as a country as a whole in increasing its GDP, quality of assets for production causing a gain in a countries economy.