The depreciable life of an asset is of concern to the financial manager. In general,
A) a longer depreciable life is preferred, because it will result in a faster receipt of cash flows.
B) a shorter depreciable life is preferred, because it will result in a faster receipt of cash flows.
C) a shorter depreciable life is preferred, because management can then purchase new assets, as the old assets are written off.
D) a longer depreciable life is preferred, because management can postpone purchasing new assets, since the old assets still have a useful life.

Question

Quizplus · Accepted Answer

A shorter depreciable life is preferred because it allows for faster depreciation expenses, which can reduce taxable income and result in earlier tax savings, thus accelerating cash flows.

The Depreciable Life of an Asset Is of Concern to the Financial