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.
Goniometer and Its Use, Equipment
plant cell
Plant
Plant
Plant
Al Jubail Desalination Plant