ACCT410 Unit 3 IP - Acquisitions and Payments

Companies that face more taxes that are burdensome

This preview shows 6 out of 7 pages.

defer taxes for the company but would not help to avoid these taxes. Companies that face more taxes that are burdensome may decide to use the DDB because although it gives a lower income, it would give more of a tax savings, thus more cash that shareholders can be given or that can be reinvested in the company. If a company wants to have the same tax relief each year, the straight-line method would be used because of the depreciation value being evenly distributed throughout the useful life period. In conclusion, depreciation schedules have to be analyzed to make the appropriate decisions for Balls and Bats, Inc. Tables were supplied to show how each depreciation method would affect the yearend value of the asset. The depreciation method chosen would depend on what the company wants. Straight-line depreciation method will give a larger net income but the DDB will give a larger tax return in the first year of business. Methods and assumptions should be examined and understood before a depreciation method is chosen.
Image of page 6

Subscribe to view the full document.

ACQUISITIONS AND PAYMENTS References Accelerated Depreciation. (2001-2012). Retrieved from financial-dictionary/financial-statement-analysis/accelerated-depreciation-2234 Elliott, J.A., Horngren, C.T., Philbrick, D.R., & Sundem, G.L. (2011). Financial accounting (10 th ed.). Upper Saddle River, NJ: Pearson Education, Inc.
Image of page 7
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern