Assume Do It Corp. is taxed at 25% on all of its income. They are considering buying a large amount of new equipment ($800,000). They have determined that the units method would not be realistic. They have been doing poorly, and project losses for the next four years. They fear they will lose any tax advantage from the depreciation for these four years as they will have no income to absorb the expense.
They have some new long-term projects in place and believe they will return to profitability five years from now. What advice would you give them when determining the factors associated with determining depreciation and the method to depreciate the asset?