Nebraska Communications is considering the purchase of a new satellite. The firm believes the satellite will help generate future earnings. In addition, the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.
A) inventory valuation
B) declining balance
C) appreciation
D) depreciation

Question

Quizplus · Accepted Answer

The option that provides tax benefits through a lower net income is depreciation. Choice A (inventory valuation) and choice C (appreciation) do not directly relate to the tax benefits of a lower net income through depreciation. Choice B (declining balance) is a method of depreciation, but alone it does not provide tax benefits.

Nebraska Communications Is Considering the Purchase of a New Satellite