Reference no: EM132429400

Questions -

Q1. At December 31, 20X1, the tax return records of Garner Corporation reflected the following information: Revenue $100,000, Operating Expenses (excluding depreciation) $66,000, and Depreciation Expense (MACRS) $7,000. Garner's income tax rate is 30%. Garner is considering using the straight-line depreciation method for financial statement reporting, in which case depreciation expense would be $4,000. What would be the difference in pretax income between using the straight-line method versus an accelerated method of depreciation?

$3,000

$2,100

$900

$0

Q2. At December 31, 20X1, the tax return records of Garner Corporation reflected the following information: Revenue $100,000, Operating Expenses (excluding depreciation) $66,000, and Depreciation Expense (MACRS) $7,000. Garner's income tax rate is 30%. Garner is considering using the straight-line depreciation method for financial statement reporting, in which case depreciation expense would be $4,000. Electing the accelerated depreciation method on the income tax return instead of adopting straight-line, would save how much cash in 20X1?

$3,000

$2,100

$900

$0