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

question 12

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 depreciation expense?

• A) $122 400 reduction
• B) $217 600 reduction
• C) $340 000 reduction
• D) $217 600 increase

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Definitions:

Circulatory System

The circulatory system is an organ system that permits blood and lymph circulation to transport nutrients, oxygen, carbon dioxide, hormones, and blood cells to and from cells in the body.

Mesoderm

The intermediate layer in an embryo during its initial stages of development, responsible for forming the muscular, skeletal, and circulatory systems.

Somites

Blocks of mesoderm that are located on either side of the spine in the developing embryo, which will differentiate into the vertebrae, ribs, muscles, and dermis.

Mesonephros

One of three excretory organs appearing during embryonic development; forms caudal to the pronephros as the pronephros disappears. It is well developed and is functional for a time before the establishment of the metanephros, which gives rise to the kidney. It undergoes regression as an excretory organ, but its duct system is retained in the male as the efferent ductule and epididymis.