Use the Information Below to Answer the Following Questions

question 36

Multiple Choice

Use the information below to answer the following questions:
Unstable Ltd has decided to change its depreciation method from straight-line to reducing balance, with the agreement of its auditors and taxation authorities. As a result, its annual depreciation expense increases by $200,000. The company’s income tax rate is 40%.
-What is the effect on ROA,which was 0.2 prior to the change?

• A) It increases.
• B) It decreases.
• C) There is no effect.
• D) It cannot be determined from the information provided.

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Definitions:

McGregor

Refers to Douglas McGregor, a social psychologist best known for proposing two theories of human motivation and management: Theory X and Theory Y.

Existence Need Category

A category in Maslow's hierarchy of needs that includes basic physical requirements such as food, water, and shelter.

Physiological

Relating to the functions of living organisms and their parts, or the physical and chemical factors and processes involved.

Clayton Alderfer

An American psychologist known for developing ERG Theory, which categorizes human needs into existence, relatedness, and growth categories.