You plan to meet with your department's financial accounting people tomorrow to make sure they understand the differences between tax accounting and financial accounting and reporting, specifically in the area of depreciation.
- From a financial accounting perspective, explain to them the purpose of using depreciation journal entries.
- Describe how this is different from a tax accounting perspective.
- Discuss how the depreciation that a financial accountant may use, may differ for the very same asset from what a tax accountant would use.
- Do you think it is ethical to have the same asset's deprecation handled two different ways: one for tax accounting and one for financial accounting? Why or why not?