Which of the Following Statements Regarding Depreciation Is Incorrect

question 7

Multiple Choice

Which of the following statements regarding depreciation is incorrect?

• A) The depreciation tax shield adjusts with the level of inflation.
• B) The nominal amount of depreciation is fixed, thus the higher the rate of inflation, the lower the real value of the depreciation that you can claim.
• C) Tax law allows accelerated depreciation.
• D) The rate at which firms are permitted to depreciate equipment is known as the modified accelerated cost recovery system, or MACRS.

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