Capitalizing Vs Expensing..

[dr777]

Might be silly question in the meanwhile, but I’m really getting crazy of this issue;
Why Income Variability is LOW when Capitalizing vs Expensing..?? and Why the NI (at the first year) is higher when Capit. vs Exp…???
Any help..

 

[Flashback]

Consider asset in value of $100.000
Expensing immediately upon purchasing -$100.000 (1-T) immediate effect in CY earnings.
Capitalizing assuming 10 Y deprecitaion S/L in CY you have impact of only -$10.000 (1-T) on CY earnings.
In subsequent periods depreciation expense contiunues until reaching 0.00 or SV but if you expensed if once off in PY you don’t have again expense of same asset in CY.
That’s why only in 1st year expensing results with lower earnings after tax.