Trainer Ltd Is Trying to Decide Whether to Change from the Reducing

question 27

Multiple Choice

Trainer Ltd is trying to decide whether to change from the reducing balance method of depreciation to the straight-line method for both accounting and tax purposes. Using the reducing balance method at the rate allowable for taxation purposes, the expense would be $1 020 000. If it changed to the straight-line method, depreciation expense would be $680 000. If the straight-line method were used instead of the reducing balance method, what would be the effect on the following?
-Net book value of assets:

• A) $340 000 reduction
• B) $340 000 increase
• C) $217 600 reduction
• D) $217 600 increase.

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Definitions:

Solid South

A term historically used to describe the domination of the Democratic Party in the southern United States, particularly from the post-Civil War era until the mid-20th century.

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the 1930s to help the United States recover from the Great Depression.

Welfare State

A social system in which the government assumes primary responsibility for the welfare of its citizens by providing services such as healthcare, education, and financial support.

Public Works Administration

A New Deal agency in the United States (1933-1944) created to provide public infrastructure jobs in the wake of the Great Depression.