A is corrent because the additional $5,000 in depreciation on the tax return by using the 150% declining balance method would result in a tax savings or current tax benefit of $1,500 ($5,000 x 30%). If Ajax used the straight-line method of depreciation for tax purposes, depreciation for year year 2 would have been $10,000 ($100,000/ 10 years). If Ajax uses the 150% declining balance method for tax purposes, depreciation would be $15,000 ($100,000 x 1/10 x 1.5 = $15,000).
B is incorrect because the additional $5,000 in depreciation on the tax return by using the 150% declining balance method would result in a tax savings or current tax benefit of $1,500 ($5,000 x 30%). If Ajax used the straight-line method of depreciation for tax purposes, depreciation for year year 2 would have been $10,000 ($100,000/ 10 years). If Ajax uses the 150% declining balance method for tax purposes, depreciation would be $15,000 ($100,000 x 1/10 x 1.5 = $15,000).
B is incorrect because the additional $5,000 in depreciation on the tax return by using the 150% declining balance method would result in a tax savings or current tax benefit of $1,500 ($5,000 x 30%). If Ajax used the straight-line method of depreciation for tax purposes, depreciation for year year 2 would have been $10,000 ($100,000/ 10 years). If Ajax uses the 150% declining balance method for tax purposes, depreciation would be $15,000 ($100,000 x 1/10 x 1.5 = $15,000).
D is incorrect because the additional $5,000 in depreciation on the tax return by using the 150% declining balance method would result in a tax savings or current tax benefit of $1,500 ($5,000 x 30%). If Ajax used the straight-line method of depreciation for tax purposes, depreciation for year year 2 would have been $10,000 ($100,000/ 10 years). If Ajax uses the 150% declining balance method for tax purposes, depreciation would be $15,000 ($100,000 x 1/10 x 1.5 = $15,000).
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