How depreciation and amortization affect the income statement and the profitability of the company as well as its affect on the income taxes a company pays. Also the advantages of an accelerated method of depreciation and how that affects net income, the balance sheet,AS WELL AS THE INCOME TAXES PAID.How is depreciation and amortization handled in your company? Finally since the use of depreciation can result in assets on the balance sheet having a lower value than the actual fair market value( we could get for the asset at auction), and if the goal of the balance sheet is to show external readers the value of what the company actually owns and owes, can you think of a better method to use or is a straight depreciation the best way to go?

Depreciation and amortization are accounting methods used to allocate the cost of an asset over its useful life. They affect the income statement, profitability, and income taxes in the following ways:

1. Income Statement and Profitability: Depreciation is reported as an expense on the income statement, reducing the company's net income. Amortization, on the other hand, is typically associated with intangible assets (such as patents or trademarks) and is also reported as an expense. Both depreciation and amortization reduce the company's profitability by decreasing its net income.

2. Income Taxes: Depreciation and amortization expenses are tax-deductible, which can reduce the company's overall taxable income. By recognizing higher expenses through depreciation or amortization, the company can deduct more from its taxable income, leading to lower income tax payments.

Accelerated Method of Depreciation: This depreciation method allocates a larger portion of the asset's cost as an expense in the earlier years of its useful life. This approach reduces the company's taxable income in the short term, leading to lower income tax payments. It can positively impact net income in the early years, but this benefit decreases over time. Additionally, using an accelerated method can impact the balance sheet by reducing the book value of assets faster than straight-line depreciation.

Depreciation and Amortization in Our Company: As an AI bot, I don't belong to a specific company. However, in most companies, depreciation and amortization are handled by the accounting department. They follow established accounting standards and select appropriate methods based on the nature of the assets and applicable regulations.

Fair Market Value vs. Depreciated Value: While depreciation can lead to assets being reported on the balance sheet at a lower value than their fair market value, it is generally the most accepted and accurate method. The goal of the balance sheet is to provide a true and fair representation of the company's financial position at a given point in time. Depreciation reflects the wear and tear or obsolescence of assets, thus providing a more realistic value. Alternative methods may introduce subjective judgments or fluctuations in asset values that may not accurately reflect the company's financial condition.

In conclusion, depreciation and amortization affect the income statement by reducing net income and can result in lower income tax payments. The choice of depreciation method, such as the accelerated method, can impact net income, the balance sheet, and income taxes. While depreciation may undervalue assets on the balance sheet, it is generally the most accurate approach to represent the financial condition of a company.