Asked by Kristine Mae Almodiel on Jul 20, 2024
Verified
If a company buys a machine for $10,000 cash and plans to depreciate it at $1,000 per year for 10 years, the two most important aspects of this transaction to the finance manager (as opposed to the accountant) are:
A) the purchase of the machine and the tax savings from the depreciation expense.
B) recording the purchase of the machine and its depreciation expense.
C) calculating depreciation expense and its compliance with the tax code.
D) the impact on factory capacity due to the equipment purchase.
Tax Savings
The amount of money that a person or company reduces from their tax obligation as a result of deductions, credits, or allowances.
Depreciate
The decrease in the value of an asset over time, often due to wear and tear, obsolescence, or market conditions, typically applied to fixed assets.
Finance Manager
A professional responsible for managing a company's financial activities, including budgeting, forecasting, and investment analysis.
- Learn about the methods corporations use for securing financing to acquire assets.
- Identify the differences between financial and accounting perspectives in a corporate environment.
Verified Answer
HF
HASNAIN FATEH MUHAMMEDJul 21, 2024
Final Answer :
A
Explanation :
The finance manager would be concerned about the cash outflow of $10,000 and the impact on the company's cash reserves. Additionally, they would be interested in the tax savings from the depreciation expense, which would impact the company's tax liability. The other choices may be important considerations, but they are not the two most important aspects from a finance manager's perspective.
Learning Objectives
- Learn about the methods corporations use for securing financing to acquire assets.
- Identify the differences between financial and accounting perspectives in a corporate environment.