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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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There are several economic explanations for why trade is so commonplace. Match each of the examples listed below with the econom
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Answer:

Explanation:

A. Swiss watch manufacturers producing high quality time pieces.

1. Comparative Advantage

B. U.S. auto makers offering a great variety of makes and models of cars.

2. Specialization or Economies of Scale

C. The ability of developing nations to export textiles to wealthier countries.

US auto makers manufacture on large scale so they have economies of scale . Moreover they are technically superior because of specialisation .  

1. Comparative Advantage

wealthier nation too can export textile but that will be costlier so developing nation has comparative advantage of cheap labour.

D. Doctors becoming experts in one type of medicine rather than becoming proficient in many areas.

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E. Your economics professor paying a gardener to do work that he/she could do on their own.

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3 years ago
Microsoft and Intel are two companies that illustrate the concept of "bargaining power of suppliers" in Porter's five forces mod
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Answer:

True

Explanation:

Intel is a major computer hardware supplier in the world, and its friend Microsoft buys hardware parts from them which it uses in manufacturing computers such as processor chips.

In respect to the bargaining power of suppliers in Porter's five forces model of industry competition, Intel acts as a supplier to Microsoft. And because of Intel's bargaining power like its market dominance and limited competitors, it can set prices which the–Microsoft has no choice but to purchase.

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3 years ago
When depreciation is computed for partial periods under a decreasing charge depreciation method, it is necessary to?
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Why do employees who participate in planning change efforts tend to have more positive opinions about the change
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Answer:

This question is incomplete, the options are missing. The options are the following:

a) They have the opportunity to reject the proposed change.

b) They will have the opportunity to know more than others about the change.

c) They will be able to convince customers the change was the right thing to do.

d) They will feel a sense of ownership of planned change and are more likely to be on board.  

And the correct answer is the option D: They will feel a sense of ownership of planned change and are more likely to be on board.

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To begin with, it will be more acceptable for an employee of a company or a member of a group to agree with a change if that person was involved in the planning of the change. That means that he will feel that he is part of the solution and therefore part of the team because his ideas were listened and maybe he contributed with something. That is why that members who participate in the planning of a change will always be more positive about the final outcome due to the fact that they were there during the process of deciding that outcome and that will make them feel integrity related to the work and to the team as well.

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