causing them to increase by $5.4 million. They changed the way they compute depreciation expense by using the straight-line method‚ resulting in an increase in net income by $11 million or $.93 per common share. The depreciation policy and residual values were changed as well of machinery‚ plants‚ and equipment‚ which caused and increase in net income by $3.2 million or $.27 per share. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change
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clearly all of the accounting changes Harnischfeger made in 1984. -In 1984‚ there was a switch from accelerated to straight line depreciation retroactively. Because of this‚ the depreciation expense decreased. -The estimated depreciation lives on certain U.S. plants‚ machinery and equipment changed. The economic life of these assets was increased‚ so the depreciation expense was lowered. -There was an improvement in the minimum pension benefit. This change produced a lower pension expense. -The
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its allowance for uncollectible accounts‚ it also records bad debt expense in the income statement. If a company overestimates the allowance account‚ bad debt expense is too high and net income is understated. As well‚ accounts receivable (net of the allowance account) and total assets are both understated on the balance sheet. In future periods‚ the company will not need to add as much to its allowance account since it is already overestimated (or‚ it can reverse the excess existing allowance balance)
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reported on: (1)The statement of financial position(current asset section)—but at what amount(value)? Some will not pay (2)this involves choosing one of the 2 methods to account for these uncollectable accounts (bad debts) Direct write-off method & Allowance method 3. Decision Flowchart ! 1. Direct write-‐off method (1) Assumes all receivables will be collected‚ a bad debt is recognized only when we know the debt
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CURRENCY DEPRECIATION AND ITS IMPACTS Devaluation means decreasing the value of nation’s currency relative to gold or the currencies of other nations. Devaluation occurs in terms of all other currencies‚ but it is best illustrated in the case of only one other currency. Devaluation and Depreciation are sometimes used interchangeably‚ but they always refer to values in terms of other currencies and the value of currency is determined by the interplay of money supply and money demand. In common modern
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statements. • Based on the financial statements in 1984 Harnischfeger made changes from the previous year‚ the corporation computed depreciation expenses on plants‚ machinery and equipment using the straight-line method. Prior to the accounting changes in 1984‚ the company had experienced some financial losses was able to recover. There has been a change in depreciation accounting when it comes to profit. Before they used to apply the accelerated methods for the operating plants. The changes were made
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Financial Statement: A Summary report which quantitatively describes the financial health of a company Purpose of financial Statement: The objective of financial statements is to provide information about the financial position‚ performance and changes in financial position of an enterprise to the shareholders and lenders. it is useful to a wide range of users in making economic decisions. Components of Financial Statement: Profit & Loss Statement / Income Statement Retained earnings
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Chapter 14 Depreciation Allowance (折舊免稅額) – Plant and Machinery 1. Learning Objectives 1.1 Identify assets which are plant or machinery. 1.2 Identify persons who can claim depreciation allowance. 1.3 Identify the type of expenditure that qualifies for the depreciation allowance. 1.4 Compute depreciation allowance under the pooling system. 1.5 Compute depreciation allowance under the non-pooling system. 1.6 Calculate the balancing adjustment that arises when an asset is disposed of. 1.7 Identify
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financial statements Harnischfeger Corporation computed depreciation expenses on plants‚ machinery and equipment using the straight-line method for financial reporting purposes. 2. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change affect profits in future years? The effect of this change was applied retroactively to all assets that were subjected to accelerated depreciation. It increased net income by $11 million or $0.93 per
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changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. In the 1984 the corporation computed depreciation expense on plants‚ machinery and equipment by using the straight-line method for financial reporting purposes. These changes were made to provide a more equitable allocation of the cost of the plants. 2. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change affect profits in future years? Harnischfeger
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