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Author Question: IBC Corporation just purchased an expensive piece of equipment. Originally, the firm planned to ... (Read 24 times)

Scollins7

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IBC Corporation just purchased an expensive piece of equipment. Originally, the firm planned to depreciate the equipment over 11 years on a straight-line basis, but now wants to depreciate the equipment on a straight-line basis over 8 years. Other things held constant, what will occur as a result of this change? Assume for this question that the company uses the same depreciation method for tax and shareholder reporting purposes.

IBC’s reported net income will increase.


IBC’s cash flow will decrease.


IBC’s net fixed assets as shown on the balance sheet will be lower at the end of the year.


IBC’s income tax expense for the year will increase.



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Marked as best answer by Scollins7 on Aug 7, 2023

Mynameisrandom

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Scollins7

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review


triiciiaa

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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