Which of the following statements is CORRECT?
B) Under current laws and regulations,corporations must use straight-line depreciation for all assets whose lives are 5 years or longer.
C) Corporations must use the same depreciation method (e.g. ,straight line or accelerated)for stockholder reporting and tax purposes.
D) Since depreciation is not a cash expense,it has no effect on cash flows and thus no effect on capital budgeting decisions.
E) Under bonus depreciation,higher depreciation charges occur at t = 0,and this increases the initial investment outlay and thus lowers a project's projected NPV.

Question

Which of the following statements is CORRECT?
B) Under current laws and regulations,corporations must use straight-line depreciation for all assets whose lives are 5 years or longer. 
C) Corporations must use the same depreciation method (e.g. ,straight line or accelerated)for stockholder reporting and tax purposes. 
D) Since depreciation is not a cash expense,it has no effect on cash flows and thus no effect on capital budgeting decisions. 
E) Under bonus depreciation,higher depreciation charges occur at t = 0,and this increases the initial investment outlay and thus lowers a project's projected NPV.

Quizplus · Accepted Answer

The Answer of Which of the following statements is CORRECT?
B) Under current laws and regulations,corporations must use straight-line depreciation for all assets whose lives are 5 years or longer. 
C) Corporations must use the same depreciation method (e.g. ,straight line or accelerated)for stockholder reporting and tax purposes. 
D) Since depreciation is not a cash expense,it has no effect on cash flows and thus no effect on capital budgeting decisions. 
E) Under bonus depreciation,higher depreciation charges occur at t = 0,and this increases the initial investment outlay and thus lowers a project's projected NPV.

Which of the Following Statements Is CORRECT