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 cash from operations?

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense, so changes in the depreciation method do not directly affect cash from operations.

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