Trainer Ltd is trying to decide whether to change from the reducing balance method of depreciation to the straight-line method for both accounting and tax purposes. Using the reducing balance method at the rate allowable for taxation purposes, the expense would be $1 020 000. If it changed to the straight-line method, depreciation expense would be $680 000. If the straight-line method were used instead of the reducing balance method, what would be the effect on the following?
-Changing the period of amortisation does NOT affect:

Question

Quizplus · Accepted Answer

Changing the method of depreciation affects net profit, income tax liability, and amortisation expense, but it does not affect cash flow from operations, as depreciation is a non-cash expense.

Trainer Ltd Is Trying to Decide Whether to Change from the Reducing