Using PPS sampling, determine the sample size that you want to use for sending accounts receivable confirmations. Draw on the in
formation you learned about PPS sampling in Chapter 10. The book value of accounts receivable before the allowance for doubtful accounts is $71,622,804. You make the following assumptions: You set tolerable misstatement for accounts receivable at $3,500,000. Expected misstatement = $750,000. Risk of incorrect acceptance = 37%. Given these parameters: What do you believe to be appropriate qualitative assumptions for inherent risk and control risk given the risk of incorrect acceptance used?
1 answer:
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Answer:
the depreciation expense on the equipment will be 1,785 for tax purpose.
Explanation:
We will look into the MACRS (Modified Accelerated Cost Recovery System)
table for a property of seven years placen into service in the 4th quarter:
Which give us 3.57%
now we multiply the basis by the coefficient and get the value for depreciation
50,000 x 3.57% = 1,785 depreciation expense under MACRS
