Part of the relevant financial data pertaining to capital-budgeting decisions are the income tax
consequences of proposed capital expenditures. As we point out later in this chapter,tax savings due to depreciation deductions are of paramount importance in capital expenditure analysis. Income tax laws pertaining to the acquisition, use, and disposal of investment assets are exceedingly complex. Thus, accounting can add value by ensuring that all relevant tax related items, especially depreciation deductions, are included as part of the information set provided to managers for capital-budgeting purposes.