Changing the method of depreciation from straight line to MACRS is a source of cash for the firm.

Question

Quizplus · Accepted Answer

Changing the method of depreciation from straight line to MACRS does not result in a source of cash for the firm. Depreciation is a non-cash expense, meaning it does not involve any actual cash outflows. Changing the method of depreciation may impact the timing and amount of the tax deductions for depreciation, which may result in a lower or higher tax liability, but it does not provide any actual cash inflows or outflows for the firm.

Changing the Method of Depreciation from Straight Line to MACRS