Which of the following statements is most correct? The reason why the U.S. Congr

Question

Which of the following statements is most correct? The reason why the U.S. Congress allows business to use MACRS depreciation as opposed to conventional methods is to reduce the business tax burden over the project life. Under the declining balance depreciation system, it its always desirable to switch to straight-line depreciation. The cost basis is usually the purchase price of the property, plus any sales taxes, transportation costs, and the cost of installation or improving the property to make it fit for intended use. Salvage value is not considered, nor is the cost of the land the property is on. The main reason why a typical firm may use a straight-line depreciation method in reporting an income to outside investors (as opposed to any other accelerated tax depreciation methods) is to abide by the accounting principle-that is to report the true cost of doing business. The cost basis is usually the purchase price of the property, plus any sales taxes, transportation costs, the cost of installation or improving the property to make it fit for intended use, the salvage value, and the cost of the land the property is on.

Explanation / Answer

C. (e)

D. True

E. (g)

F. (k)

G. (o)

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