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Your company recently purchased two large pieces of production equipment for $125,000 each. One piece of equipment was installed at your firm's Texas facility and
Your company recently purchased two large pieces of production equipment for $125,000 each. One piece of equipment was installed at your firm's Texas facility and is being depreciated by MACRS depreciation. The other piece of equipment was placed in the California facility, where it is being depreciated by sum-of-years'- digits depreciation with zero salvage value. Assume the company pays federal income taxes each year and the tax rate is constant. Your corporate accounting department noted that the two pieces of equipment are being depreciated differently and wonders whether the corporation will wind up paying more income taxes over the life of the equipment as a result of this. What do you tell them
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