When a firm can _____ its capital equipment over a shorter period,it cuts its taxes _____.

Question

Quizplus · Accepted Answer

When a firm depreciates its capital equipment over a shorter period, it reduces its taxable income and therefore pays less taxes now, rather than later. Choice A (appreciate; later) is incorrect because capital equipment does not appreciate in value or increase in worth over time. Choice B (appreciate; now) is also incorrect because appreciation means an increase in value, which leads to higher taxes. Choice D (depreciate; later) is also incorrect because it would lead to higher taxes now and lower taxes later.

When a Firm Can _____ Its Capital Equipment Over a Shorter