[Sherriaf]

Hello, can someone clarify for me if the depreciation tax shield is a relative cost or not? And if the disposal price of the old equipment a relative cost or not.

I got confused because I saw different answers from different review courses.

Also, I have another question about economics. If the government is least concerned about inflation, would they increase or decrease the money supply?

I am taking my exam tomorrow and I just want to get these simple concepts right in my head. THANKS!

AUD 79 (EXPIRED) 86
BEC 69, 74, 75 (EXPIRED) 77
REG 84
FAR 74, 77

[Anonymous]

Hi Sherriaf,

I took BEC on Tuesday (2/23) so I may be able to help you. Depreciation tax shield is a relative cost (albeit indirectly) but depreciation expense is not. The tax shield is the actual $$ that you will be saving when paying taxes, but depreciation expense as a whole is just something you report on your books..make sense?

The disposal price of the old equipment is generally not a relative cost but it can be in certain circumstances. For example, it wouldn't be a relative cost if you were deciding between buying equipment A or equipment B, since either way you would be getting the same amount of money from the old equipment and it would not affect your decision is any way. However, it could be a relative cost if you were deciding whether to keep the old equipment or to buy new equipment. In that case, the money you got from the old equipment would have an impact on your decision on whether to buy the new equipment or not. The key point in determining whether something is a relative cost is whether it is going to have any impact on your decision.

For your economics question- if the government doesn't care about inflation, I would guess that they would increase the money supply because even though there will be inflation, an increased money supply will make GDP grow.

More money in the money supply means there's more money out there for people to spend so the Consumer component of GDP increases, which means prices of things will go up due to inflation.

Hope this helps. It's possible that I could be wrong on a couple of points so feel free to correct me.

[Sherriaf]

Thanks Bakagal!! Your explanation helped clarify the confusion I had.

I see you are taking REG April 10. I am planning on taking mine sometimes in April, what study material are you using?

AUD 79 (EXPIRED) 86
BEC 69, 74, 75 (EXPIRED) 77
REG 84
FAR 74, 77

[Anonymous]

I actually haven't set a date yet for REG- just sometime in April 2010. It'll probably around the 10th though. I'm using Becker…starting to study on Monday.

[Sherriaf]

I just took my BEC test and I am not really sure how I feel about it. So many things came that were not covered by Becker. I felt that Wiley, even though they are not nearly as organized as Becker, was much closer to the real exam material. I am crossing all my fingers on passing though. I wanna feel that I am half way through so I can get motivated for the next one.

I am starting to study REG next monday, and planning on sitting for it around April 15.

AUD 79 (EXPIRED) 86
BEC 69, 74, 75 (EXPIRED) 77
REG 84
FAR 74, 77

[Anonymous]

Becker for REG was a good match. I had 2 topics covered in a couple/couple+ questions not in Becker and those could have been the pre-test questions. I passed with a 97 (not sure how, but that is what the score says).

Becker for BEC was a ton harder and more detailed than what I actually saw on the actual exam. I haven't received my score for this section yet though.

[Anonymous]

I also felt prepared using Becker for BEC. Of course there were a couple of random IT questions that Becker didn't cover…but all other questions on the exam (esp. computational) were similar or easier than Becker's. I'll let you know in 2 weeks what I got!

[Author]

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