You own a company whose profits tax is 20% and fixed assets depreciate over 10 years. Which would be the best change for your company? a) lower tax rate and faster depreciation b) lower tax rate and slower depreciation c) higher tax rate and faster depreciation d) higher tax rate and slower depreciation

You own a company whose profits tax is 20% and fixed assets depreciate over 10 years. Which would be the best change for your company? a) lower tax rate and faster depreciation b) lower tax rate and slower depreciation c) higher tax rate and faster depreciation d) higher tax rate and slower depreciation

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 5C: The following two statements concern depreciation: 1. Because our plant was shut down for part of...

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Your company has always depreciated assets using the straight-line method. Your tax accountant has explained that a switch to the double-declining balance method would minimize taxes in the current year, but you are concerned about the impact this change would have on the value of long-term assets on the balance sheet and future tax liabilities.Assuming your projected sales (and therefore tax bracket) are predicted to increase dramatically over the next 5 years, what should you do?
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If you owned a company, would you prefer the market value of its assets to rise $10million or the market value of its liabilities to fall $10million?
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