Plaxo Corporation has a tax rate of 35% and uses the straight-line method of depreciation for its equipment,which has a useful life of four years.Tax legislation requires the company to depreciate this type of equipment using the following schedule: year 1- 50%,year 2 - 30%,year 3 - 15% and year 4 - 5%.In 2011 Plaxo purchases a piece of equipment with a four year life and an original cost of $100,000.Discuss how this transaction will effect Plaxo's income taxes in 2011.

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The Answer of Plaxo Corporation has a tax rate of 35% and uses the straight-line method of depreciation for its equipment,which has a useful life of four years.Tax legislation requires the company to depreciate this type of equipment using the following schedule: year 1- 50%,year 2 - 30%,year 3 - 15% and year 4 - 5%.In 2011 Plaxo purchases a piece of equipment with a four year life and an original cost of $100,000.Discuss how this transaction will effect Plaxo's income taxes in 2011.

Plaxo Corporation Has a Tax Rate of 35% and Uses