Which of the Following Best Explains Why It Is Sensible

question 20

Multiple Choice

Which of the following best explains why it is sensible for a firm to use an accelerated depreciation schedule rather than straight-line depreciation?

• A)The firm will have substantially fewer depreciation expenses later in the depreciation timeline.
• B)The firm can decide over how many years an item may be depreciated, thus allowing it full control of its depreciation expenses.
• C)The firm will substantially decrease its depreciation tax shield across all of the depreciation timeline.
• D)The firm will receive greater benefits to its cash flow earlier in the depreciation timeline and thus increase net present value (NPV).

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Definitions:

Insured

A person or entity covered by an insurance policy, receiving protection against specified risks or damages.

Risk Of Loss

In contractual terms, refers to which party bears the financial burden if the goods are damaged or lost before delivery is completed.

Fire

A rapid oxidation process, which is a chemical reaction resulting in the release of heat and light, commonly seen as flames.

Fixture

An item of personal property that has been attached to land or a building in such a way that it is considered legally a part of the real property.