Final answer:
The statement is false; depreciation for Earnings-Pre-Tax (E P) is not generally the same as depreciation for taxable income due to different rules and methods prescribed by tax authorities versus GAAP for financial reporting.
Step-by-step explanation:
It is false that depreciation deducted when calculating Earnings-Pre-Tax (E P) is generally the same as depreciation deducted when calculating taxable income. In accounting and taxation, the methods of calculating depreciation for financial reporting purposes and tax purposes may differ. For the purpose of calculating taxes, the tax authorities prescribe specific rules and methods for depreciation that can differ from the generally accepted accounting principles (GAAP) used for financial reporting.
For example, companies may use the straight-line method for financial reporting purposes, but for tax purposes, they may be required to use an accelerated depreciation method such as the Modified Accelerated Cost Recovery System (MACRS) in the United States. Accelerated depreciation allows for higher depreciation expenses in the initial years of an asset's life, which reduces taxable income earlier on but may not necessarily align with how assets depreciate over their useful life in financial statements. The tax code also sometimes offers additional depreciation deductions or incentives, such as bonus depreciation or Section 179 expensing, which further distinguish tax depreciation from book depreciation. These differences are reconciled on a company's tax return using forms such as the Form 4562 for depreciation and amortization in the United States.