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

question 17

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,
-which of the following is NOT affected?

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

Recognize how the timing of cash flows affects the project valuation.

Distinguish between capital budgeting decisions and financing decisions.

Learn the relationship between NPV, discounted payback period, and project acceptance.

Understand the advantages and disadvantages of the payback method in project analysis.

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Definitions:

Ceruminous Glands

Specialized glands in the outer ear canal that produce cerumen (earwax), helping to trap dust and protect the ear from foreign particles.

Eccrine Sweat Glands

Glands that produce sweat for thermoregulation via direct opening to the skin surface.

Stratified Squamous Epithelium

Stratified squamous epithelium is a type of tissue consisting of multiple layers of flat cells, providing protection against abrasion in areas such as the skin and mouth.

Epidermis

The outermost layer of the skin, serving as a protective barrier against environmental hazards and maintaining moisture.