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Sagot :
Nantell’s operating income will increase as a result of this Congressional action
Initially, the firm plans to depreciate over 5 years but the Congress pass a law that states company must depreciate over 7 years
- Because of this, decrease in depreciation amount will increase the net taxable income, so, Nantell’s taxable income will not be lower.
- The decrease in depreciation will result to increase the operating income, thus, Nantell’s operating income (EBIT) will increase
- We knew depreciation is a non-cash activity and it will not effect the cash. So, Nantell’s cash position will not increase nor improve.
- It is well know that decrease in depreciation amount will increase the net income, so, Nantell’s reported net income for the year cannot be lower.
- The decrease in depreciation amount will increase the net taxable income, therefore increasing the tax liability on net taxable income. So, Nantell’s tax liability cannot be lower.
Learn about the congress action here
brainly.com/question/15697239
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