Final answer:
Corporations may use different depreciation methods for tax and financial reporting purposes due to the varying objectives of tax laws and financial reporting standards.
Step-by-step explanation:
A corporation may use different depreciation methods for tax and financial reporting purposes. For tax purposes, corporations often use Modified Accelerated Cost Recovery System (MACRS), which is prescribed by the IRS to calculate depreciation deductions. However, for financial reporting according to Generally Accepted Accounting Principles (GAAP), companies may choose to use a different method such as straight-line, declining balance, or sum-of-the-years' digits. This is because tax laws and financial reporting standards have different objectives, where tax laws aim to generate revenue for the government whereas financial reporting aims to provide accurate financial information to stakeholders.
It is not mandated that corporations must use the same depreciation method for both tax and financial reporting. Instead, businesses are free to select the method that best matches their financial reporting goals while complying with the IRS regulations for tax purposes.