Please double-check that this is the correct answer. Thank you. When calculating free cash flows, which of the following statements is NOT true regarding the depreciation?As an accrual, depreciation does not factor into free cash flow calculations.O Depreciation is an accrual, not a cash flow.O Depreciation create a tax shield.O Depreciation is first removed and the subsequently added back in when calculating free cash flows.

Depreciation refers to the decrease in the value of an asset over time as a result of wear and tear,…

Answered: When calculating free cash flows, which…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 17DQ

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Which sentence is incorrect? Select one: a. Depreciation is not the actual change in the value of the asset. b. Accumulated Depreciation account has effects on the cash flow statement. c. Accumulated Depreciation is called a contra asset account. d. Depreciation is the process of allocating the cost of an asset to expense, not a valuation process.
Select all that are true with respect to depreciation. Group of answer choices Depreciation is a cash flow outflow at the time it is recorded in the financial statements Depreciation itself is not a cash flow Accounting depreciation impacts cash flow, Tax depreciation does not Accounting depreciation does not impact cash flow, Tax depreciation does impact cash flow The depreciation tax shield is a relevant cash flow for decision making
⦁ The reason that depreciation is a source of cash inflow is because A. it is a tax-deductible non-cash expense.B. it supplies cash for future asset purchases.C. it is a tax-deductible cash expense.D. it is a taxable expense.
Demonstrates the difference between depreciation costs as expenses and the cash flow generated by the purchase of a fixed asset? Give an example?
Which of the following is not a factor in selecting a depreciation method? a. salvage valueb. repair and maintenance costsc. Inflationd. the risk associated with the cash flows from the asset
When a depreciable asset is sold, with no proceeds (i.e., sold for zero), then it can be ignored for decision making because there is by definition no impact on cash flow. Group of answer choices True False
Provide a brief explanation of why depreciation of capital assets is considered in determining potential net income from an investment, but not included in determining the net cash flow of an investment.
Is Penny correct? Do the terms depreciation, depletion, and amortization all mean the same thing?
The basic principle of valuation states that the value of any asset is: O The sum of the present value of all cash flows generated by the assetO The sum of all future cash flows generated by the assetO The present value of next year's cash flow onlyO The degree of cash flow riskiness is not a relevant factor in valuation
Which of the following is not true in regard to selling fixed assets? a.If the selling price is more than the book value, a gain is recorded. b.The cash receipt is recorded. c.The journal entry is similar to discarding fixed assets. d.Accumulated Depreciation will be credited.
Which of the following statements are true? Select one or more: a. MACRS must be used for book purposes if it is used for tax purposes. b. Managers often prefer the straight-line method because it helps to smooth earnings. c. Units of production method is not appropriate for natural resources. d. Double-declining balance recognizes more depreciation expense early in an asset's life. PreviousSave AnswersNext
is less Tax on Profit on Sale of Asset and less Operating Costs (revenue and expenses) or (other cash flows)?

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