Part 2 Required: Assume that Dodder operates in a country with a 40% tax rate and that accounting depreciation is fully tax deductible. Complete the following table. From a Cash Flow perspective, which depreciation method would you prefer? Straight Line Double Declining Balance Cash Revenue Cash Expenses Depreciation Expense Income before tax Income Tax Net Income Operating Cash Flow Upon completion, enter Operating Cash Flow below: Straight Line - 0% Tax DDB - 0% Tax Straight Line - 40% Tax DDB - 40% Tax

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Part 2
Required: Assume that Dodder operates in a country with a 40% tax rate and that accounting depreciation is fully tax deductible. Complete
the following table. From a Cash Flow perspective, which depreciation method would you prefer?
Straight Line
Double Declining Balance
Cash Revenue
Cash Expenses
Depreciation Expense
Income before tax
Income Tax
Net Income
Operating Cash Flow
Upon completion, enter Operating Cash Flow below:
Straight Line - 0% Tax
DDB - 0% Tax
Straight Line - 40% Tax
DDB - 40% Tax
Transcribed Image Text:Part 2 Required: Assume that Dodder operates in a country with a 40% tax rate and that accounting depreciation is fully tax deductible. Complete the following table. From a Cash Flow perspective, which depreciation method would you prefer? Straight Line Double Declining Balance Cash Revenue Cash Expenses Depreciation Expense Income before tax Income Tax Net Income Operating Cash Flow Upon completion, enter Operating Cash Flow below: Straight Line - 0% Tax DDB - 0% Tax Straight Line - 40% Tax DDB - 40% Tax
Problem 8-6: The Dodder Corporation
The Dodder Corporation has annual cash revenues of 30000 and annual cash expenses of 12000. If it used straight line depreciation, the
annual expense would be $7560. Using Double Declining Balance, the annual expense would be 16800.
Part 1
Required: Assume that Dodder operates in a country with a 0% tax rate and complete the following table. From a Cash Flow perspective,
which depreciation method would you prefer?
Straight Line
Double Declining Balance
Cash Revenue
Cash Expenses
Depreciation Expense
Income before tax
Income Tax
Net Income
Operating Cash Flow
Transcribed Image Text:Problem 8-6: The Dodder Corporation The Dodder Corporation has annual cash revenues of 30000 and annual cash expenses of 12000. If it used straight line depreciation, the annual expense would be $7560. Using Double Declining Balance, the annual expense would be 16800. Part 1 Required: Assume that Dodder operates in a country with a 0% tax rate and complete the following table. From a Cash Flow perspective, which depreciation method would you prefer? Straight Line Double Declining Balance Cash Revenue Cash Expenses Depreciation Expense Income before tax Income Tax Net Income Operating Cash Flow
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