Author Question: A start-up firm is making an initial investment in new plant and equipment. Assume that currently ... (Read 78 times)

eboni · **on:** Aug 7, 2023

A start-up firm is making an initial investment in new plant and equipment. Assume that currently its equipment is being depreciated on a straight-line basis over 6 years, but now in Year 2 the company must depreciate the equipment over 9 years. Assume for this question that the company uses the same depreciation method for tax and shareholder reporting purposes. What would occur in Year 2?

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The firm’s taxable income would decrease.

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The firm’s reported net income would decrease.

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The firm’s tax payments would decrease.

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The firm’s net cash flow would decrease.

Talvinder.Singh · **Reply #1 on:** Aug 7, 2023

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