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

question 26

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?
-Changing the period of amortisation does NOT affect:

• A) net profit
• B) cash flow from operations
• C) income tax liability
• D) Amortisation expense

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Definitions:

Psychological Barrier

Mental or emotional blocks that impede a person's ability to communicate effectively, make decisions, or progress towards goals.

New Product

An item or service recently introduced to the market that offers novel features or benefits not previously available.

Value Barrier

Challenges or factors that limit the perceived worth or utility of a product or service to potential customers.

New-Product Adoption

The process by which consumers or businesses start using a new product, potentially going through stages from awareness to acceptance and regular use.