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Which of the following statement completions is NOT CORRECT? For a profitable firm, when MACRS accelerated depreciation is compared to straight-line depreciation, MACRS accelerated allowances produce a. Lower tax payments in the earlier years of an asset's life. b. Larger total undiscounted profits from the project over the project's life. c. Higher depreciation charges in the early years of an asset's life. d. Smaller accounting profits in the early years, assuming the company uses the same depreciation method for tax and book purposes. e. Larger cash flows in the earlier years of an asset's life.

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anthougo

Answer:

The NOT CORRECT statement is:

b. Larger total undiscounted profits from the project over the project's life.

Explanation:

The MACRS (Modified Accelerated Cost Recovery System) apportions larger depreciation expense in the earlier years of the asset's life, as it attempts to depreciate higher cost in those earlier years than the later years.  This implies that the accounting profits in the early years can only be smaller and the undiscounted profits cannot be larger over the project's life.

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