Author Question: IBC Corporation just purchased an expensive piece of equipment. Originally, the firm planned to ... (Read 23 times)

Scollins7 · **on:** Aug 7, 2023

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.

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IBC’s reported net income will increase.

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IBC’s cash flow will decrease.

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

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

Mynameisrandom · **Reply #1 on:** Aug 7, 2023

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