Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
What you're proposing would be to book the tax savings in the first year, and nothing for the following 19 years.

But also, depreciation can only be booked as a cost because it also impairs the asset. You cannot claim a 100% loss for tax purposes and still claim your asset is worth 100%, now can you?

The point of depreciation is that the value of the future income from the investment is reduced as time passes because there's less useful life left on the asset, as well as the asset being damaged with use. But the reason that's booked for tax purposes is that it's also booked for firm valuation purposes.

Money today being more valuable than money tomorrow is probably implicit in the depreciation as well. Or it could be, for a second-order effect.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Migeru (migeru at eurotrib dot com) on Wed Jan 26th, 2011 at 10:43:06 AM EST
[ Parent ]

Others have rated this comment as follows:

Display:

Occasional Series