Suppose Congress changed the tax laws so that Berndt’s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?

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If Congress changed the tax laws so that Berndt’s depreciation expenses doubled, it would have a positive impact on reported profit and net cash flow. The increase in depreciation expenses would reduce Berndt’s taxable income, resulting in lower taxes paid. As profits are after taxes, it would increase the reported profit. A reduction in federal taxes may also result in higher cash flows as less money goes to them.

This could be used to increase productivity and efficiency by reinvesting in the company through other opportunities, like hiring new staff members or purchasing technology/equipment. This could also create new jobs that can help strengthen the local economy, allowing businesses such as Berndt make a bigger contribution to their community while maintaining a profit margin.

Making changes to tax laws could be a positive thing for businesses. It can provide them financial relief by reducing taxation, which in turn leads to increased profitability and cash flow. These types of adjustments are a great way to position your company for long-term success in competitive markets.

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