Eison Corporation has provided the following information concerning a capital budgeting project: The company uses straight-line depreciation on all equipment.
The income tax expense in year 3 is:
A) $21,000
B) $42,000
C) $15,000
D) $6,000

Question

Eison Corporation has provided the following information concerning a capital budgeting project:  The company uses straight-line depreciation on all equipment.
The income tax expense in year 3 is:
A) $21,000 
B) $42,000 
C) $15,000 
D) $6,000

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($280,000 - $0) ÷ 4 years = $70,000 per year
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Eison Corporation Has Provided the Following Information Concerning a Capital