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valentina_108 [34]
3 years ago
7

In 2022, internal auditors discovered that Axel Corp., had debited an expense account for the $2,090,000 cost of a machine purch

ased on January 1, 2019. The machine's useful life was expected to be 11 years with no residual value. Straight-line depreciation is used by Axel. The journal entry to correct the error will include a credit to accumulated depreciation of:
Business
1 answer:
antoniya [11.8K]3 years ago
3 0

Answer:

Debit Depreciation expense $570,000

Credit Accumulated depreciation $570,000

<em>(To record the accumulated depreciation for 3 years)</em>

Explanation:

Using a Straight-line depreciation method, depreciation expense = (Cost - Salvage value)/Estimated useful life

Depreciation expense = $2,090,000 / 11 years = $190,000 yearly

We would assume that the internal auditors detected the error at the beginning of Year 2022, so the accumulated depreciation for 3 years (Jan 2019 - Dec 2021) would be $190,000 x 3 years = $570,000

The following correctional entries will apply:

Debit Fixed asset - Machine $2,090,000

Credit Expense account $2,090,000

<em>(To appropriately record the purchase of machine)</em>

The required adjustment fot the accumulated depreciation is recorded above under the answer section.

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4 0
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The returns of ABC Company and the market are listed below. Compute the beta for ABC Company stock (Hint: Think rise over run).
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Given that AAPL's beta of 0.6035 suggests the stock theoretically experiences 40 percent less volatility than SPY, AAPL would be regarded as being less volatile than SPY in this situation.

A stock with a beta greater than 1.0 fluctuates more than the market over time. A stock's beta is less than 1.0 if it moves less than the market. High-beta equities typically carry higher risks but also have a bigger potential reward. Although they carry less risk, low-beta equities often offer lesser returns.

Because of this, beta is frequently employed as a risk-reward ratio, which aids investors in deciding how much risk they are ready to accept in order to reap the potential rewards. It's crucial to take stock price volatility into account when determining risk. Beta is a useful proximate for risk if you view of risk as the likelihood that a stock would depreciate in value.

Beta = Covariance/Variance where: Covariance=A measure of an investment's return in relation to the market Variance is a measurement of how the market deviates from its mean.

Learn more about beta company stock here:

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Shady Lane's income tax payable account decreased from $14 million to $12 million during 2016. If its income tax expense was $80
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