Mainline Clinic, a for-profit business, had revenues of $11.1 million last year. Expenses other than depreciation totaled 67 percent of revenues, and depreciation expense was $1.3 million. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Mainline must pay taxes at a rate of 39 percent of pretax (operating) income.
Mainline Clinic, a for-profit business, had revenues of $11.1 million last year. Expenses other than
Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Mainline’s net income? If net income would go down, enter the amount of the change as a negative number. If net income would go up, enter the amount of the change as a positive number.
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