What would be the reduction in income-tax charges

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Reference no: EM131061573

A concern has a total income of $1 million/year, and all expenses except depreciation amount to $600,000/year. At the start, of the first year of the concern's operation, a composite account of all depreciable items shows a value of $850,000, and the overall service life is estimated to be 20 years. The total salvage value at the end of the service life is estimated to be $50,000. Thirty percent of all profits before taxes must be paid out as income taxes. What would be the reduction in income-tax charges for the first year of operation if the sum-of-the-years-digits method were used for depreciation accounting instead of the straight-line method?

Reference no: EM131061573

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