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Anton [14]
3 years ago
5

Assume that a company currently depreciates its fixed assets over 7 years. Which of the following would occur if a tax law chang

e forced the company to depreciate its fixed assets over 10 years instead?
A. The company's tax payment would increase
B. The company's cash position would increase
C. The company's net income would increase.
D. Statements a and b are correct
E. Statements b and c are correct.
Business
1 answer:
KATRIN_1 [288]3 years ago
6 0

Answer: E. Statements b and c are correct.

Explanation:

Should the company begin to depreciate over a 10 year period as opposed to 7, that would mean that the depreciation expense per year will reduce as it is now spread over a longer period. Because Depreciation reduces the Net Income and therefore reduces the taxes on the Net Income, reducing depreciation means that there is more Net Income. This will mean that the company can be taxed more.

Also, as just mentioned, spreading Depreciation over a longer period will reduce the depreciation expense. This would translate to a lower reduction in the Net Income so the Net Income will increase by this change.

For example, if a $70,000 asset was to be depreciated to $0 over 7 years, those payments would be $10,000 each using the Straight line method. This would reduce Net Income by $10,000 every year. If the period was changed to 10 years, the amount drops to $7,000 per year which would mean only $7,000 to remove from the Net Income meaning there'll be more Net Income and hence, more taxes.

If you need any clarification do react or comment.

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3 0
3 years ago
The opportunity cost of a choice is the _____ of the opportunities lost.a. Valueb. Interest
salantis [7]

Answer:

a. Value.

Explanation:

The opportunity cost of a choice is the value of the opportunities lost.

In Economics, Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.

Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.

Hence, the opportunity cost of a choice  is the benefits that could be derived in from another choice using the same amount of resources.

<em>For instance, if you decide to invest resources such as money in a food business (restaurant), your opportunity cost would be the profits you could have earned if you had invest the same amount of resources in a salon business or any other business as the case may be.</em>

5 0
4 years ago
West Company borrowed $10,000 on September 1, Year 1 from the Valley Bank. West agreed to pay interest annually at the rate of 6
Setler [38]

Answer:

The correct answer is $200

Explanation:

The interest expense appearing on the company's income statement in year 1 is for  a period of four months(September to December) year 1.

The interest expense using an annual rate of 6% is computed thus:

interest expense=$10,000*6%*4/12=$200

The correct option is $200 which is not one of the options provided,hence the options need.

In another version of the question,option D was $200 which shows is missing here,

All in all, the correct answer is $200 interest for a period of four months from September to December

8 0
3 years ago
Bennett Co. has a potential new project that is expected to generate annual revenues of $253,100, with variable costs of $140,00
Vlad [161]

Answer:

Hence, the annual operating cash flow is:  $44860

Explanation:

                                 Year 0    Year 1

Initital investment    

Inflows                                $253,100  

variable costs                       ($140,000)

fixed cost                             (53800)

Depreciton                         ($23,200)

Interest expense                 ($19,500)

Net cash inflows                   $16600 

Tax at 40%                           ($6640)

Net Cashinflows after tax      $9960

Add Depreciation                   $23,200  

Interest net of tax                   $11.700

Operating cashflows              $44860

Hence, the annual operating cash flow is: $44860

5 0
3 years ago
Speech that is designed to move the listener to action or belief is _____. entertaining persuasive informative none of the above
horsena [70]

When the purpose of the communication is to the make the listener believes what the speaker says, the type of speech that would be most suitable is persuasive.

Thus, the answer to the question above is (B) persuasive, since the purpose of <em>entertaining speech</em> would be to create entertainment for the listeners while <em>informative speech’s</em> purpose would be to give information that the listeners do not yet know.

4 0
3 years ago
Read 2 more answers
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