Nebraska Communications Is Considering the Purchase of a New Satellite

question 48

Multiple Choice

Nebraska Communications is considering the purchase of a new satellite. The firm believes the satellite will help generate future earnings. In addition, the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

• A) inventory valuation
• B) declining balance
• C) appreciation
• D) depreciation

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Definitions:

Class

A category or grouping used to organize items, objects, or concepts based on shared characteristics or attributes.

Declining-Balance Depreciation

A method of depreciation that results in larger depreciation expenses during the earlier years of an asset's life and smaller charges in the later years.

Straight-Line Depreciation

A method of computing depreciation for accounting purposes where an asset's cost is reduced uniformly over its useful life.

Tax Savings

Reduction in tax payments achieved through allowable deductions, credits, or adjustments.