Question
Assume Hospital A is a for-profit organization that pays taxes at a rate of 30 percent and Hospital B is a not-for-profit organization that pays
Assume Hospital A is a for-profit organization that pays taxes at a rate of 30 percent and Hospital B is a not-for-profit organization that pays no taxes. If depreciation expense for the year that ended on December 31, 2012 were doubled (e.g. , from $100,000 to $200,000) for both organizations, which of the following statements is most correct?
A. Net income would increase for both Hospitals A and B.
B. Net income would decrease for Hospital A but not for Hospital B.
C. Estimated cash flow would increase for both Hospitals A and B.
D. Estimated cash flow would increase for Hospital A but not for Hospital B.
E. Estimated cash flow would increase for Hospital B but not for Hospital A.
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