Why is depreciation included in the statement of cash flows?© BrainMass Inc. brainmass.com September 26, 2022, 6:21 pm ad1c9bdddf
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.© BrainMass Inc. brainmass.com September 26, 2022, 6:21 pm ad1c9bdddf>