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iren [92.7K]
1 year ago
8

The following is an example in which the proposed method is applied to a fixed asset with an original cost of $248,000, an estim

ated useful life of 5 years, and a salvage value of approximately $8,000. Year Years of Life Used Fraction Rate Depreciation Expense Accumulated Depreciation at End of Year Book at End of Year 1 1 1/15 $16,000 $16,000 $232,000 2 2 2/15 $32,000 $48,000 $200,000 3 3 3/15 $48,000 $96,000 $152,000 4 4 4/15 $64,000 $160,000 $88,000 5 5 5/15 $80,000 $240,000 $8,000 The president favors the new method because he has heard the following. It will increase the funds recovered during the years near the end of the assets’ useful lives when maintenance and replacement disbursements are high. It will result in increased write-offs in later years and thereby will reduce taxes. Instructions What is the purpose of accounting for depreciation? Is the president’s proposal within the scope of generally accepted accounting principles? In making your decision, discuss the circumstances, if any, under which use of the method would be reasonable and those, if any, under which it would not be reasonable. The president wants your advice on the following issues. (1) Do depreciation charges recover or create funds? Explain. (2) Assume that the Internal Revenue Service accepts the proposed depreciation method in this case. If the proposed method were used for stockholder and tax reporting purposes, how would it affect the availability of cash flows generated by operations?
Business
1 answer:
Alexus [3.1K]1 year ago
4 0

The purpose of accounting for depreciation is to allocate the cost of a tangible or physical asset over its useful life.

<h3>What is depreciation?</h3>

It should be noted that depreciation simply means the wear and tear of a product based in usage. <em>Depreciation</em> shows how much of an asset has been used.

The scope of generally accepted accounting principles aims to improve the clarity and consistency if the communication of financial information. The five principles include:

Revenue recognition.

Cost principle.

Matching principle.

Objectivity principle.

Full disclosure.

The president’s proposal is within the scope of generally accepted accounting principles. It should be noted that depreciation doesn't guarantee funds.

Learn more about depreciation on:

brainly.com/question/1203926

#SPJ1

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Suppose that Omar's marginal utility for each additional cup of coffee is 5.5 utils per cup no matter how many cups he drinks. O
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Answer:

Explanation:

To answer this question, we first need to calculate the marginal utility per dollar for doughnuts. Recall that the marginal utility per dollar for a good is the marginal utility divided by the price of the good (=MU/P). For the first doughnut we have 10 (=10/$1), the second doughnut 9(=9/$1), third 9, fourth 8, fifth 7, sixth 6, seventh 5, eighth 4, ninth 3, tenth 2 and eleventh 1. The marginal utility per dollar for every cup of coffee is 5.5 (=5.5/$1). To determine how big the budget would have to be before Omar would spend a dollar buying his first cup of coffee, we compare the marginal utility per dollar values. Omar will purchase the first doughnut before he buys a cup of coffee because the marginal utility per dollar for the doughnut is greater than the marginal utility per dollar for the cup of coffee (10>1.5). The same is true for the second through the eighth doughnut. This implies Omar will buy 8 doughnuts at the price of $1 before he buys his first cup of coffee. Therefore his budget will need to $9 before he buys his first cup of coffee, $8 on the doughnuts and $1 for the cup of coffee.

Answer: $8

8 0
3 years ago
Elementary school treachery only need a community college or associates degree
katovenus [111]

That answer is false, because you also need two years of schooling or teaching. Plze mark me brainiest

3 0
3 years ago
1. A parent sells merchandise to its subsidiary at a markup of 20% on cost. In the current year, the subsidiary had $120,000 in
NARA [144]

Answer:

The subsidiary reports cost of goods sold at A. $660,000.

Explanation:

Cost of goods sold is the direct cost of producing or purchasing the goods sold by a business. The formula for cost of goods sold is as follows:

Cost of goods sold = Opening inventory + Purchases - Closing inventory

The subsidiary calculates its cost of goods sold as follows.

Opening inventory           $120,000

Add: Purchases                $720,000

Less: Closing inventory    ($180,000)

Cost of goods sold           $660,000

Therefore, the correct option is A. $660,000.

6 0
3 years ago
investment is made at r percent compounded annually, at the end of n years it will have grown to A = P(1 + r)n . An investment m
bixtya [17]

Answer:

$1,500

Explanation:

Given the compounding formula A = P(1+r)^{n}

And given an investment (P), made at 16% compounded annually (r), and an ending amount of $1,740 (A) at the end of the year (n = 1 year), the original amount invested (P) can be computed as follows.

1,740 = P(1+0.16)^{1}

1,740 = P * 1.16

= P = 1,740/1.16 = 1,500.

Therefore, the original investment was $1,500.

3 0
3 years ago
Rent collected in advance is: Multiple Choice A shareholders' equity account in the balance sheet. A temporary account, not in t
gulaghasi [49]

Answer:

A liability account in the balance sheet.

Explanation:

When rent is collected in advance, the entries required to be recognized at the point of collection is as follows;

Debit Cash account

Credit Unearned/Deferred rental revenue

The cash account is an asset while the Unearned/Deferred rental revenue is a liability account.

As such, the collection of rent in advance is A liability account in the balance sheet.

3 0
3 years ago
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