A Company Should Choose a Depreciation Method That

question 174

Multiple Choice

A company should choose a depreciation method that

• A)best allocates the original cost of the asset to the periods benefited by the use of the asset.
• B)saves the most taxes.
• C)minimizes net income.
• D)shows the highest amount of net income.

---

Definitions:

Tax Rate

The magnitude of tax imposition by the government on the revenue streams of individuals or enterprises.

Bond Rating

An assessment of credit quality provided by rating agencies, indicating the default risk of a bond issuer.

Pure Play Approach

An investment strategy that focuses on companies specializing in a single line of business or product, enhancing portfolio focus but potentially increasing risk.