Question

Depreciation must be considered when evaluating the incremental operating cash flows associated with a capital budgeting project because:_____.

Answer 1

Depreciation must be considered when evaluating the incremental operating cash flows associated with a capital budgeting project because depreciation has an impact on the taxes paid by the firm, which is a cash flow.

Depreciation expense is allocated to charge a reasonable portion of the depreciation expense each accounting period over the expected useful life of the asset. Depreciation includes the depreciation of assets with a predetermined useful life.

Depreciation Example – If a van is purchased from a company at a price of Rs. 100,000 and the expected life of the truck is 5 years, the company can depreciate the asset as Rs at depreciation expense. 20,000 yen each year for 5 years.

The purpose of depreciation is to reconcile the cost of a productive asset with a useful life of more than one year with the income generated by using that asset. The cost of an asset is generally amortized over the years the asset is in use.

Learn more about Depreciation here: brainly.com/question/1203926

#SPJ4