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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:

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Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding D
love history [14]

Answer:

The cost per equivalent unit of materials is $2.28

Explanation:

The Concept of Equivalent units measures the number of units complete to the extent of the input elements added during production.

The FIFO method in Process costing Accounts for Costs only incurred during the Manufacturing Period. Also, The Opening Work In Process is Assumed to be completed first.

<em>The First Step is to Calculate the Total Equivalent Units of Production for Raw Materials :</em>

To finish Opening Work In Process (34,000 × 0%)         =        0

Started and Completed ((153,000 - 34,000) × 100% )     =  119,000

Closing Work In Process (34,500 × 100%)                       =   34,500

Total Equivalent Units of Production                               =   153,500

<em>The Next and Final Step is to calculate the cost per equivalent unit of materials.</em>

Cost per equivalent unit = Total Cost During the Current Period / Total Equivalent Units of Production

                                           = $349,625 / 153,500

                                           = $2.2776872

                                           = $2.28 (2 decimal places)

Conclusion :

The cost per equivalent unit of materials is $2.28

7 0
2 years ago
Reflect on a issue of law and order being face the problem of<br> Pakistani nation​
kherson [118]

Answer:

Critically reflect on 2 the serious issue of law and order being faced by Pakistani nation today and write a letter to the editor of an English newspaper and express your the serious issue of law and order being faced by Pakistani today and write a letter to the editor of an English newspaper and express your opinion as a responsible citizen to improve the situation. the serious issue of law and order being faced by Pakistani today and write a letter to the editor of an English newspaper and express your opinion as a responsible citizen to improve the situation.

Explanation:

5 0
3 years ago
Merchandise inventory is Select one: a. None of the above b. Reported under the classification of Property, Plant and Equipment
Elden [556K]

Answer:

d. Reported as a current asset on the balance sheet

Explanation:

Merchant inventory refers to st finished goods available for sale at any given time. Merchant inventory is commonly referred to as inventory. It is recorded as a current asset in the balance sheet.

Merchant inventory is acquired through purchasing by retailers, wholesalers, and distributors to be sold to customers. Merchant inventory will specifically refer to the unsold goods at the end of a period. It is recorded at its acquisition cost. i.e., the cost which the trader paid to obtain the merchandise.

6 0
3 years ago
Francine moved out of the property she was renting, and she left it in pristine condition. How long after she moves out does the
inessss [21]

One month; property manager will have to return her security deposit in one month after she moves out of the property.

More about security deposit:

Source of funds to pay tenant obligations owed to the landlord in the event of a breach of the rental or lease agreement. When a tenant fails to uphold their financial obligations under the terms of a rental or lease agreement, the landlord may be able to recover some of their financial losses from the security deposit.

If a tenant's creditworthiness affects the security deposit, the landlord must set clear and specific criteria for the various creditworthiness levels they consider when choosing tenants (such as credit scoring).

Additionally, each potential tenant who falls within each level of creditworthiness must pay the security deposit amount that has been established for that level.

Know more about security deposit here: brainly.com/question/1752098

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4 0
1 year ago
Souza Inc, which produces and sells a single product, has provided its contribution format income statement for October.
Dafna1 [17]

Answer:

d. $300

Explanation:

Calculation for what its net operating income should be closest to

Using this formula

First step is to calculate the contribution margin per unit using this formula

Contribution margin per unit= Contribution margin ÷ Number of units

Let plug in the formula

Contribution margin per unit= $48,000 ÷ 4,000 units

Contribution margin per unit= $12

Second step is to calculate the contribution margin

Contribution margin = 3,500 units × $12

Contribution margin = $42,000

Now let calculate the net operating income using this formula

Net operating income = Sales - Variable cost - Fixed expenses

Let plug in the formula

Net operating income= $42,000 - $41,700

Net operating income= $300

Therefore its net operating income should be closest to $300

8 0
2 years ago
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