Darwin Limited Is Considering Purchasing a New Asset with an Initial

question 39

Multiple Choice

Darwin Limited is considering purchasing a new asset with an initial cost of $75 000 and an estimated annual income of $20 000. Cash operating expenses are expected to be $11 500 per year. Straight-line depreciation will be used over the five-year life of the asset and salvage value of $15 000 is to be considered in computing depreciation. Assuming that the income tax rate is 30%, what is the amount of annual tax savings from depreciation? (Assume the straight-line depreciation method is used for both accounting and tax purposes.)

• A) $3600
• B) $4500
• C) $9150
• D) $12 750

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Definitions:

Battlefields

Areas where battles are fought, often marking significant historical events.

Soldier Ideology

Refers to the set of beliefs, values, and principles that motivate soldiers and influence their behavior in military contexts.

Jefferson Davis

The President of the Confederate States of America during the American Civil War, serving from 1861 to 1865.

Emancipation

The act of freeing someone from bondage or oppression; often refers to the abolition of slavery.