(Appendix 13C) Prudencio Corporation has provided the following information concerning a capital budgeting project:
The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.
-The income tax expense in year 3 is:
A) $21,000
B) $12,000
C) $9,000
D) $33,000

Question

(Appendix 13C) Prudencio Corporation has provided the following information concerning a capital budgeting project:
  The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.
-The income tax expense in year 3 is:
A) $21,000 
B) $12,000 
C) $9,000 
D) $33,000

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($160,000 - $0) ÷ 4 years = $40,000 per year
 11ea7761_15df_9a42_81a5_f733b6e59dd9_TB2580_00

(Appendix 13C) Prudencio Corporation Has Provided the Following Information Concerning