Poston Company uses an accelerated depreciation method for tax purposes rather than straight-line depreciation for a new asset acquisition. Which of the following choices correctly shows when the majority of depreciation would be taken (early or late in the asset's life), when most of the tax savings occur (early or late in the asset's life), and which depreciation method would have the higher present value? When Majority of Depreciation is Taken When Majority of Tax Savings Occur Depreciation Method with Higher Present Value A. Early in life Early in life Accelerated B. Early in life Early in life Straight-line C. Early in life Late in life
Poston Company uses an accelerated depreciation method for tax purposes rather than straight-line depreciation for a new asset acquisition. Which of the following choices correctly shows when the majority of depreciation would be taken (early or late in the asset's life), when most of the tax savings occur (early or late in the asset's life), and which depreciation method would have the higher present value? When Majority of Depreciation is Taken When Majority of Tax Savings Occur Depreciation Method with Higher Present Value A. Early in life Early in life Accelerated B. Early in life Early in life Straight-line C. Early in life Late in life
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 9QTD
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Question
Poston Company uses an accelerated
When Majority of Depreciation is Taken | When Majority of Tax Savings Occur | Depreciation Method with Higher Present Value | |
A. | Early in life | Early in life | Accelerated |
B. | Early in life | Early in life | Straight-line |
C. | Early in life | Late in life | Straight-line |
D. | Late in life | Late in life | Straight-line |
E. | Late in life | Early in life | Accelerated |
Multiple Choice
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Choice A
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Choice B
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Choice C
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Choice D
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Choice E
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