Which of the Following Statements About Depreciation Is TRUE

question 84

Multiple Choice

Which of the following statements about depreciation is TRUE?

• A) The tax effects of depreciation are not adjusted for inflation.
• B) The tax effects of depreciation must be adjusted for inflation.
• C) Canadian tax laws allow for inflation adjustments to depreciation each year.
• D) Capital investment is encouraged by not allowing depreciation to be adjusted for the effect of inflation.

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Definitions:

Merger Premium Per Share

The additional amount paid over the current market price of a company's shares during a merger or acquisition, reflecting the value the acquiring firm expects to gain.

Market Price

The current market price for buying or selling a service or asset.

Net Present Value

A calculation used to assess the profitability of an investment or project by summing the present values of all cash inflows and outflows associated with it.

Equity-Financed

A term describing a business that is funded through the sale of equity or shares to investors, rather than through borrowing or debt.