Solution-How much would net income before taxes in 2012 be

How much would net income before taxes in 2012 be different

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On January 1, 2010, a corporation acquired an asset for $120,000 that had a salvage value of $15,000 and a 5-year life. The asset is being depreciated using the double-declining-balance method. Company management wonders what effect this depreciation method had on net income for 2012 compared to the straight-line method. By how much would net income before taxes in 2012 be different if the straight-line method had been used for the entire time?

a. Net income before taxes would be $1,680 lower using straight-line depreciation.

b. Net income before taxes would be $1,680 higher using straight-line depreciation.

c. Net income before taxes would be $6,720 lower using straight-line depreciation.

d. Net income before taxes would be $3,720 higher using straight-line depreciation.

e. None of the above.

Reference no: EM13556113

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How much would net income before taxes in 2012 be different

Reference no: EM13556113

Reference no: EM13556113

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