TY  - CHAP
AB  - Abstract The purpose of this case is to allow students the opportunity to examine how the recent changes to depreciation incentives in the Tax Cuts and Jobs Act of 2017 (P.L. 115-97, Dec. 22, 2017) may affect the purchase of capital assets. Bonus depreciation has been extended to allow an immediate 100% deduction for eligible property, which also now includes used property. This bonus depreciation will be phased out over a nine-year period. Additionally, the progressive marginal tax rate used for business income has been eliminated and replaced by a flat 21% tax rate, representing a 14% drop in the tax rate on businesses.Specifically, this case will examine how a change from 50% to 100% bonus depreciation affects purchasing decisions between asset classes, due to the exaggerated impact on the net present value for longer lived assets. In keeping with the evolution of accounting in academia, students will be asked both to solve a realistic problem and to communicate their investment decisions effectively. To prepare students for the assignment, the informational building blocks are presented in modules following Bloom’s taxonomy – culminating in the application of the concepts in a decision-making scenario. The learning method applied in this case has been tested in the classroom, with quantifiable results showing a positive learning outcome. Pre- and post-case assessment questions were administered with significant improvement in students reported understanding across all six measures. Based on these results, this case achieves the dual goals of teaching students how to apply the concept of bonus depreciation to maximize value and how to communicate this information effectively.
VL  - 24
SN  - 978-1-83867-236-2, 978-1-83867-235-5/1085-4622
DO  - 10.1108/S1085-462220200000024010
UR  - https://doi.org/10.1108/S1085-462220200000024010
AU  - Mueller Malcolm A.
AU  - Stott Frances A.
AU  - Wilson Aaron B.
ED  - Thomas G. Calderon
PY  - 2020
Y1  - 2020/01/01
TI  - Bonus Depreciation and its Effect on Net Present Value in Relation to Capital Purchases
T2  - Advances in Accounting Education: Teaching and Curriculum Innovations
T3  - Advances in Accounting Education
PB  - Emerald Publishing Limited
SP  - 67
EP  - 87
Y2  - 2024/05/11
ER  -