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

question 16

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 cash from operations?

• A) $340 000 reduction
• B) $217 600 increase
• C) $217 600 reduction
• D) no effect

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