FIN 370T University of Phoenix Depreciation and Cash Flows Discussion

Post a total of 3 substantive responses. This includes your initial post and 2 replies to classmates or your faculty member.

undefined

Estimating cash flows isn’t difficult, but it is complicated, as there are a lot of little details to keep track of. Having a systematic approach to handling and arranging details is key to successful finance management and advancing organizational goals.

undefined

Respond to the following in a minimum of 175 words:

undefined

• Discuss a business example that shows how depreciation and accelerated depreciation can affect project cash flows.
• What would your process be to ensure that all related financial details are allocated for and tracked so as to assist in making sound business decisions?

undefined

Post 2 replies to classmates or your faculty member in a minimum of 100 words. Be constructive and professional.

undefined

Student 1 (cm)

undefined

Top of Form

Hello,

Depreciation doesn’t directly affect cash flow. It indirectly affects cash flows since it changes the organization’s tax liabilities, which then decreases cash outflows from income taxes. So pretty much when your organization prepares its income tax return, depreciation will be recorded as a cost/expense. This lessens the measure of taxable income you need to answer to the public authority, decreasing the measure of cash that leaves your business.

Depreciation’s impact on cash flow might be expanded significantly more if it’s feasible to utilize accelerated depreciation strategies, for example, double declining depreciation. This builds the measure of depreciation that counts as tax-deductible, diminishing your taxes significantly further.

Calculating the straight-line depreciation for a machine whose value is $10,00,000, with an estimated salvage value of $100,000 and a useful life of 5 years – and compare it to the accelerated methods of depreciation. ( dec 2020).

Accounting CPE, How depreciation affects cash flow, https://www.accountingtools.com/articles/how-does-…

Student 2 (lm)

Top of Form

A business example that shows how depreciation and accelerated depreciation can affect project cash flows is a business worse nightmare. I would say that currently business that are making mask are at a point where depreciation and accelerated depreciation is taking place. I say this because with some states currently saying that mask is not needed, here is where depreciation comes into play. This asset called a mask is now starting to lose its value over its course of time and will become no longer useful to the company. Then soon after accelerated depreciation sets in to place because as other states start to follow as well this cash flows doubles in declining numbers. It’s important for business owners to understand how to calculate depreciation so that they can plan better for this type of potential problems. Most importantly, it can help you to determine the true cost of doing business. Business need to understand that, depreciation refers to a concept within accounting wherein assets lose value over the course of time. After a certain point, the value of an asset will become zero, because it’s no longer useful to the business.