(Appendix 8C)Lucarell Corporation has provided the following information concerning a capital budgeting project: The company uses straight-line depreciation on all equipment. The income tax expense in year 3 is:
A)$24, 500
B)$14, 000
C)$10, 500
D)$38, 500

Question

(Appendix 8C)Lucarell Corporation has provided the following information concerning a capital budgeting project:  The company uses straight-line depreciation on all equipment. The income tax expense in year 3 is:
A)$24, 500 
B)$14, 000 
C)$10, 500 
D)$38, 500

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value)÷ Useful life
= ($160, 000 - $0)÷ 4 years = $40, 000 per year
 11eaa0c8_96b2_92f7_9cb2_c3e592ed5687_TB2487_00

(Appendix 8C)Lucarell Corporation Has Provided the Following Information Concerning a Capital