Evergreen Mfg

Multiple Choice

Evergreen Mfg. is a rapidly growing company that acquires more equipment every year. Evergreen uses straight-line depreciation in its financial statements and MACRS in its tax returns. Identify all correct statements:

A) Using straight-line depreciation in the financial statements instead of an accelerated method increases Evergreen's reported net income.
B) Using straight-line depreciation in the financial statements instead of an accelerated method increases Evergreen's annual net cash flow.
C) Using an accelerated method instead of straight-line in income tax returns increases Evergreen's net cash flow.
D) As long as Evergreen keeps growing, it will report more depreciation in its income tax returns each year than it does in its financial statements.