Which of the following statement completions is false? For a profitable firm, wh

Question

Which of the following statement completions is false? For a profitable firm, when MACRS accelerated depreciation is compared to straight-line depreciation, MACRS accelerated allowances produces _________.

Question 8 options:

Higher depreciation charges in the early years of an asset's life.

Larger cash flows in the earlier years of an asset's life.

Larger total undiscounted profits from the project over the project's life.

Smaller accounting profits in the early years, assuming the company uses the same depreciation method for tax and book purposes.

None of the above. (All of the above are correct.)

Higher depreciation charges in the early years of an asset's life.

Larger cash flows in the earlier years of an asset's life.

Larger total undiscounted profits from the project over the project's life.

Smaller accounting profits in the early years, assuming the company uses the same depreciation method for tax and book purposes.

None of the above. (All of the above are correct.)

Explanation / Answer

Larger total undiscounted profits from the project over the project's life.Since undiscounted profit over the period of asset life would be same under MACRS and SLM since assets is depreciated totally under both the cases.

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