Starbucks Income Tax Returns: A Case Study

Like mentioned earlier, using this method helps companies shield revenue from taxes. Using accelerated depreciation will allow higher deductions in the early years of an asset's life. Companies will save tax money in the early years, enabling them to invest in more assets to increase revenues in the future. Although, after a few years, this will lead to smaller depreciation expenses and greater taxable income in the later years of the assets. Companies also have the option to use the straight-line method on their financial statements and accelerated depreciation on its income tax returns. To provide an example, let us assume Starbucks buys a coffee machine for $100,000 and they expected to last for 10 years. If they decide to use the straight-line