Marrow Company has a large portion of its plant assets concentrated in an area where technology is changing rapidly. Marrow wants to minimize taxable income and maximize net income reported to stockholders. Recommend a course of action for Marrow. Support your recommendation
When technology is changing rapidly, more cost should be allocated during the early years of life when the plant asset is more productive. This is achieved by using an accelerated depreciation method like MACRS or double-declining-balance. These methods create a larger expense in the early years of life and reduce the income for the period, which reduces the amount of taxes paid. A company should select the method for financial reporting that maximizes net income such as straight-line, and the method that creates the lowest taxes for tax reporting such as MACRS.
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Why do manufacturers offer seasonal discounts to channel members? Provide an example of how one would work.
What will be an ideal response?
Companies using activity-based costing (ABC) have learned that costs are a function of:
A. Volume and activities. B. Resources and time. C. Time and complexity. D. Volume and time.
Digital Systems Corporation files a suit against Ethan, its former accountant, alleging constructive fraud. Digital Systems need not prove A) misstatement of a material fact
B) intent to deceive. C) justifiable reliance. D) an injury.
Myron had two children, Cheryl and Pete, who predeceased him. Cheryl had three children and Pete had one child. Myron had a will. Which of the following is true?
A) If Myron's will indicates that the issue are to inherit per stirpes, Pete's child will receive one half of Myron's estate. B) If Myron's will indicates that the issue are to inherit per stirpes, Pete's child will receive one fourth of Myron's estate. C) If Myron's will indicates that the issue are to inherit per capita, Pete's child will receive one half of Myron's estate. D) If Myron's will indicates the issue are to inherit per capita, each of Cheryl's children will receive one sixth of Myron's estate.