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Discussion unit 2.docx - Discuss the impact of depreciation...

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Discuss the impact of depreciation expense on the cash flow analysis of a capital project.Also, discussthe types of leasing arrangements and their pros and cons relating to depreciation expense.According to Accounting Tools, 2019. There is no impact of depreciation on cash flows, however it’s a taxdeductible, it will reduce cash outflows. It is a non-cash expense. Its an ongoing charge with reference toa fixed asset.Fixed assets over the life span are depreciated such as furniture, IT equipment, cars, machinery etc.except for land.“Depreciation is found on Income statement, balance sheet and cash flow statement” Parker, 2019.According to Parker, 2019. The depreciation expense slowly writes down the value of the fixed assetwhich is represented in the balance sheet. Furthermore, on the income statement it is shows as indirectoperating expense. Companies take a tax deduction by lowering the income using the depreciationexpense. For example, if a company purchases a vehicle for $25,000. They charge the depreciation $5000a year, then in five years the vehicle is worth zero on the books. Depreciation helps companies avoidapplying a big amount of expense deduction on the income statement.Also, discuss the types of leasing arrangements and their pros and cons relating to depreciation expense.

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Term
Fall
Professor
Dr. Schmidt
Tags
Depreciation, impact of depreciation expense

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