What is the effect on the Balance Sheet of adding $10 of depreciation, given a 40% tax rate? (Choose 1)
Asked 5 MBA students this question and no one knew it....
1. Retained Earnings decrease $10, Fixed assets decrease $10
2. Retained Earnings increase $10, Fixed assets decrease $10
3. Cash increases $6, Retained Earnings decrease $4, Fixed assets decrease $10
4. Cash increases $4, Retained Earnings decrease $6, Fixed assets decrease $10
5. No change
6. Fixed assets increase $10
Asked 5 MBA students this question and no one knew it....
1. Retained Earnings decrease $10, Fixed assets decrease $10
2. Retained Earnings increase $10, Fixed assets decrease $10
3. Cash increases $6, Retained Earnings decrease $4, Fixed assets decrease $10
4. Cash increases $4, Retained Earnings decrease $6, Fixed assets decrease $10
5. No change
6. Fixed assets increase $10