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    Why is depreciation included in the statement of cash flows?

    © BrainMass Inc. brainmass.com September 26, 2022, 6:21 pm ad1c9bdddf
    https://brainmass.com/business/finance/financial-accounting-statements-14384

    SOLUTION This solution is FREE courtesy of BrainMass!

    Depreciation is included in the statement of Cash Flows because it gives Tax Benefits. Depreciation is shown as an expense which reduces the taxable Income.

    Consider this :
    Gross Income - 100,000
    Tax - 34%
    Depreciation - $20,000

    Income Tax w/o Dep - $34,000
    Income Tax with Dep - $27,200 ( 34% of 80,000)

    Saving due to Dep - $6800.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com September 26, 2022, 6:21 pm ad1c9bdddf>
    https://brainmass.com/business/finance/financial-accounting-statements-14384

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