Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed
funds was invested in a new building addition as well as in equipment and fixture additions. Choi's banker requires her to submit semiannual financial statements so he can monitor the financial health of her business. He has warned her that if profit margins erode, he might raise the interest rate on the borrowed funds to reflect the increased loan risk from the bank's point of view. Choi knows profit margin is likely to decline this year. As she prepares year-end adjusting entries, she decides to apply the following depreciation rule: All asset additions are considered to be in use on the first day of the following month. (The previous rule assumed assets are in use on the first day of the month nearest to the purchase date.)Required:1. Identify decisions that managers like Choi must make in applying depreciation methods.2. Is Choi’s rule an ethical violation, or is it a legitimate decision in computing depreciation?3. How will Choi’s new depreciation rule affect the prot margin of her business?
Depreciation: when a valuable assets loses value over time
the decision she took was to reduce salvage value, increase depreciation expenses and decrease profit tax
. Is Choi’s rule an ethical violation, or is it a legitimate decision in computing depreciation?
Choi's choice of rule is unethical but there are companies in recent tines who employ the same method. It is not keeping with best practices. However, she can employ the recent accounting methods. disclosed if there are changes made.
3. How will Choi’s depreciation rule affect the profit margin of her business?
<h3>Answer: <em>To apply job costing in a manufacturing setting involves tracking which "job" uses various types of direct expenses such as direct labor and direct materials and then allocating overhead costs (indirect labor, warranty costs, quality control, and other overhead costs) to the jobs..</em></h3>
An unstructured interview is generally more informal and doesn't follow a defined structure, pattern or script. Generally the interviewer is allowed to determine how many questions he/she will ask to the candidate depending on the answers given previously. The interviewer might also decide to use other types of methods, like completing a process or solving a problem which varies from one candidate to another.
