Unstable Ltd Has Decided to Change Its Depreciation Method from Straight-Line

question 30

Multiple Choice

Unstable Ltd has decided to change its depreciation method from straight-line to reducing balance.As a result,its annual depreciation expense increases by $200 000.The company's income tax rate is 30 per cent.
-What is the effect on ROE?

• A) It increases.
• B) It decreases.
• C) It is not effected.
• D) It cannot be determined from the information provided.

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Definitions:

Environment

The surrounding conditions, influences, or forces which affect the survival, development, and evolution of organisms or communities.

Photosystem

A complex of proteins and pigments in plants and algae that absorbs light energy and converts it into chemical energy during photosynthesis.

Chlorophyll

A green pigment found in the chloroplasts of plants, algae, and some bacteria, essential for photosynthesis as it absorbs light energy to convert carbon dioxide and water into glucose.

Mitochondrion

An organelle found in large numbers in most cells, in which the biochemical processes of respiration and energy production occur. It has a double membrane, the inner layer being folded inward to form layers (cristae).