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Exercise 6.12 LO3 Financial statement effects of depreciation-straight-line versus accelerated methods Assume that a company chooses an accelerated method of calculating depreciation expense for financial
Exercise 6.12 LO3 Financial statement effects of depreciation-straight-line versus accelerated methods Assume that a company chooses an accelerated method of calculating depreciation expense for financial statement reporting purposes for an asset with a five-year life. Required: State the effect (higher, lower, no effect) of accelerated depreciation relative to straight-line depreciation on: a. Depreciation expense in the first year. b. The asset's net book value after two years. c. Cash flows from operations (excluding income taxes). Exercise 6.12 LO3 Financial statement effects of depreciation-straight-line versus accelerated methods Assume that a company chooses an accelerated method of calculating depreciation expense for financial statement reporting purposes for an asset with a five-year life. Required: State the effect (higher, lower, no effect) of accelerated depreciation relative to straight-line depreciation on: a. Depreciation expense in the first year. b. The asset's net book value after two years. c. Cash flows from operations (excluding income taxes)
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