- NEW!
by Sherri on October 18th, 2009
Dumdum did a good job of answering this question and there is one 'catch' to understating depreciation. When you go to sell the depreciated item, there is a depreciation recapture that is on depreciated allowed or allowable! So, if you have NOT claimed all the deprecation you could by understatment, you will still pay taxes on what should have been claimed, not just what was claimed!
by dumdum on October 18th, 2009
My understanding is if depreciation is undrstated your net income would be increased by the like amount that you would have saved on taxes had you written off what you were entitled to - I think. You would not have made more but you wold have paid less taxes on what you did show as earnings. +5
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Is anyone here an accounting major or an accountant? If so, can you help me with this problem?
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by Ombliss22 on September 16th, 2011
| 1 person likes this
You're reading IF accumulated depreciation is understated, what is the affect on net income?
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Comments
You must be one that either works with or at least reads the fine print. Thanks for the 6 and back at you.
by dumdum on October 19th, 2009
lol..work with it! thanks
by Sherri on October 19th, 2009