Description
Post a total of 3 substantive responses. This includes your initial post and 2 replies to other students.
Your company has always depreciated assets using the straight-line method. Your tax accountant has explained that a switch to the double-declining balance method would minimize taxes in the current year, but you are concerned about the impact this change would have on the value of long-term assets on the balance sheet and future tax liabilities.
Respond to the following in a minimum of 175 words:
- Assuming your projected sales (and therefore tax bracket) are predicted to increase dramatically over the next 5 years, what should you do?
Reply to at least 2 of your classmates. Be constructive and professional in your responses.
Student 1
Top of Form
The straight line method is the way I would recommend to go. While the double declining method would benefit us right now with a larger immediate tax deduction, if we are predicting our sales to increase dramatically over the next five years, this method would reduce our future depreciation tax breaks. By using the straight line method we can spread the deduction evenly over the years.
STUDENT 2
Top of Form
I feel there is always the two methods on how you would do it verse how a tax accountant would handle a situation. I would do a valuation on running it the method the tax account suggested and the straight line method and determine what is best for the company and how I would like to proceed. With the projected sales increasing it would be smart to how it going to the double declining method because it could ultimately help where the company is projected to be with the next five years. Something to always keep in mind is if you are going to change the method be sure you are clear on the direction so that you can ensure everyone will follow through with the changes you made and even sometimes it is necessary. I also feel that most tax accountants will not steer you in the wrong direction when it comes to your allies and business. Something you want to be sure is if thete are more people on your team you connect to ensure everyone is doing it correctly
Explanation & Answer
Attached.
Running head: RESPONSES ON TAX MINIMIZATION
Responses on Tax Minimization
Student’s Name
Institution Affiliation
Course
Date
1
RESPONSES ON TAX MINIMIZATION
2
Hello Student One
An informative post. I agree with you that the straight-line method is recommendable for a
company predicting a dramatic increase in the projected sales and tax bracket. It is indeed true
that the double-declining
the method would only have a short-term benefit due to the large immediate tax deduction. I
agree with you that the double-declining method would reduce the company’s fu...
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