Poston Company uses an accelerated depreciation method for tax purposes rather than straight-line depreciation for a new asset acquisition. Which of the following choices correctly shows when the majority of depreciation would be taken (early or late in the asset's life), when most of the tax savings occur (early or late in the asset's life), and which depreciation method would have the higher present value? When Majority of Depreciation is TakenWhen Majority of Tax Savings OccurDepreciation Method with Higher Present ValueA.Early in lifeEarly in lifeAcceleratedB.Early in lifeEarly in lifeStraight-lineC.Early in lifeLate in lifeStraight-lineD.Late in lifeLate in lifeStraight-lineE.Late in lifeEarly in lifeAccelerated Multiple Choice Choice A Choice B Choice C Choice D Choice E

There are many methods for taking depreciation it depends on the choice of company to take…

Answered: Poston Company uses an accelerated…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Poston Company uses an accelerated depreciation method for tax purposes rather than straight-line depreciation for a new asset acquisition. Which of the following choices correctly shows when the majority of depreciation would be taken (early or late in the asset's life), when most of the tax savings occur (early or late in the asset's life), and which depreciation method would have the higher present value?

	When Majority of Depreciation is Taken	When Majority of Tax Savings Occur	Depreciation Method with Higher Present Value
A.	Early in life	Early in life	Accelerated
B.	Early in life	Early in life	Straight-line
C.	Early in life	Late in life	Straight-line
D.	Late in life	Late in life	Straight-line
E.	Late in life	Early in life	Accelerated

Multiple Choice

Choice A
Choice B
Choice C
Choice D
Choice E

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