Question: Depreciation Tax Shield: Wong, Pemberton, and Janakowski, LLP, recently purchased a new facility to house the partnership's accounting firm. The facility cost $460,000. The partnership will depreciate the facility by recording $46,000 of depreciation expense each year for 10 years. Wong, Pemberton, and Janakowski, LLP, expects that its tax rate will be 30 percent in the coming year. Required: What is the tax savings (that is, the depreciation tax shield) associated with the new facility in the coming year?
Question: Depreciation Tax Shield: Wong, Pemberton, and Janakowski, LLP, recently purchased a new facility to house the partnership's accounting firm. The facility cost $460,000. The partnership will depreciate the facility by recording $46,000 of depreciation expense each year for 10 years. Wong, Pemberton, and Janakowski, LLP, expects that its tax rate will be 30 percent in the coming year. Required: What is the tax savings (that is, the depreciation tax shield) associated with the new facility in the coming year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text:Question:
Depreciation Tax Shield: Wong, Pemberton, and Janakowski, LLP, recently
purchased a new facility to house the partnership's accounting firm. The
facility cost $460,000. The partnership will depreciate the facility by
recording $46,000 of depreciation expense each year for 10 years. Wong,
Pemberton, and Janakowski, LLP, expects that its tax rate will be 30 percent
in the coming year.
Required: What is the tax savings (that is, the depreciation tax shield)
associated with the new facility in the coming year?
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