The Annual Tax Depreciation Expense on an Asset Reduces Income

question 152

Multiple Choice

The annual tax depreciation expense on an asset reduces income taxes by an amount equal to

• A) The firm's average tax rate, t, times the depreciation amount.
• B) One minus the firm's average tax rate, t, times the depreciation amount.
• C) The firm's marginal tax rate, t, times the depreciation deduction.
• D) One minus the firm's marginal tax rate, t, times the depreciation amount.
• E) The depreciation amount.

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Definitions:

Impose

To forcibly apply or introduce rules, taxes, punishments, or ideas onto others without their consent.

Will

The mental faculty by which an individual decides upon and initiates action, or in legal contexts, a document specifying the distribution of someone's estate after their death.

Annihilate

To destroy completely, leaving nothing remaining.