Assume That Pappas Company Commenced Operations on January 1, 2008

question 86

Multiple Choice

Assume that Pappas Company commenced operations on January 1, 2008, and it was granted permission to use the same depreciation calculations for shareholder reporting and income tax purposes. The company planned to depreciate its fixed assets over 15 years, but in December 2008 management realized that the assets would last for only 10 years. The firm's accountants plan to report the 2008 financial statements based on this new information. How would the new depreciation assumption affect the company's financial statements?

• A) The firm's reported net fixed assets would increase.
• B) The firm's EBIT would increase.
• C) The firm's reported 2008 earnings per share would increase.
• D) The firm's cash position in 2008 and 2009 would increase.

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Definitions:

Employee Incentive Scheme

A program designed to motivate employees by providing rewards or benefits based on performance or achievement.

Performance Targets

Specific goals set for individuals or teams to measure and evaluate their efficiency and effectiveness.

Intrinsic Motivation

The drive to do something because it is inherently interesting or enjoyable, without needing external reward or recognition.

Extrinsic Motivation

Motivation driven by external rewards such as money, fame, grades, or praise, in contrast to intrinsic motivation, which is driven by internal personal satisfaction.