A Company Should Choose a Depreciation Method That

question 174

Multiple Choice

A company should choose a depreciation method that

• A)best allocates the original cost of the asset to the periods benefited by the use of the asset.
• B)saves the most taxes.
• C)minimizes net income.
• D)shows the highest amount of net income.

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Definitions:

Federal Income Tax

A tax levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Ability-To-Pay Principle

A taxation principle that suggests taxes should be levied according to an individual's or entity's ability to pay, favoring a more equitable distribution of the tax burden.

U.S. Income Tax

A tax imposed by the U.S. government on the income generated by businesses and individuals within its jurisdiction.

FICA Tax

A federal payroll tax in the United States that funds Social Security and Medicare programs.