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

question 33

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 ROA,which was 20 per cent prior to the change?

• A) It increases.
• B) It decreases.
• C) There is no effect.
• D) It cannot be determined from the information provided.

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Definitions:

Supply Chains

Supply chains encompass the entire process of producing and delivering a product or service, from the initial sourcing of materials to the final distribution to consumers.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to reduced costs per unit.

Third-Party Logistics Provider

An outsourced service that manages all or part of a company's logistics and supply chain operations, including transportation, warehousing, and distribution.

Replenishment Time

The period required to order and receive new stock to replace sold or used goods.