Assume that Congress recently passed a provision that will enable Bev\'s Beverag

Question

Assume that Congress recently passed a provision that will enable Bev's Beverages Inc. (BBI) to double its depreciation expense for the upcoming year but will have no effect on its sales revenue or tax rate. Prior to the new provision, BBI's net invome after taxes was forecasted to be $4 million. Which of the following best describes the impact of the new provision on BBI's financial statements versus thestatements withouth the provision? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes. A. The company cut is dividend. B. The company made a large investment in a profitable ne plant. C. The company sold a division and recieved cash in return D. The company issued new common stock E. The company issued new long term debt

Explanation / Answer

Hi, Option E is correct. Thanks, Aman

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