Company A’s non-current assets have a residual value of  zero, a beginning book value of €5,000, and an initial cost of €10,000. Company  A uses an annual depreciation percentage of 10%. Its statutory (and effective)  tax rate is 30 percent. What adjustments would an analyst make to company A’s  current year’s tax expense if she assumes that company A’s depreciation  percentage should be 12%?

A. Decrease tax expense by €60

B. Increase tax expense by €60

C. Decrease tax expense by €30

D. Increase tax expense by €30

E. No adjustment

Answer rating: 100% (QA)

The key to this question is understanding that taxes are reduced by depreciation When a company depr... View the full answer