QUESTION 1 Which of these is not an advantage of the straight line method of depreciation? A It is easy to work out due to a simple formula B Calculated once for all the years C Depreciation added to maintenance costs rise as the asset ages D The cost of the asset is spread evenly through its useful life. Which of the following is not correct regarding depreciation? A It is due to the use of an asset B Is not incurred if the asset is not used C It is a portion of a long term expense D
Premium Depreciation Generally Accepted Accounting Principles
following tasks: Prepare two different depreciation schedules for the equipment one using the double-declining balance method‚ and the other using the straight-line method. (Round to the nearest dollar). Determine which method would result in the greatest net income for the year ending December 31‚ 2005. How would taxes affect management’s choice between these two methods for the financial statements? 1. Straight-line Method Depreciation expense = Acquisition cost residual
Premium Depreciation
Health Care Budget HCS/577 Health Care Budget Based upon a review of the Patton-Fuller Community Hospital 2009 operating budget variances‚ the long and short-term plans of the various hospital departments and an in-depth analysis of general economic conditions‚ the following assumptions have been concluded and will be used in the preparation of the 2010 operating budget projections. In general‚ Patton-Fuller Community Hospital should anticipate a 3% total “deflation
Premium Generally Accepted Accounting Principles Depreciation Balance sheet
ACCT2542 – Week 1 – Self Study Module Basic Journal Revision Questions & Solutions The learning objectives for this self study are: • • To test whether you have a solid understanding of basic journal entries and key concepts covered in ACCT 1501 to ensure that you are prepared for ACCT 2542. To be able to work through the exercises WITHOUT looking at the solution. Once you have completed the exercises then check your work to the solution for accuracy. Accounting for Inventory - (Reference:
Premium Balance sheet Depreciation Generally Accepted Accounting Principles
The ratio helps in boosting the effectiveness of the company to generate income at 21.78%. The common method used is the straight-line approach. In this approach‚ the depreciation is calculated annually. The method is indicated in the formula below‚ and it is very simple and easy to use. In the case scenario of Delta Airlines‚ the company depreciates the fixed assets with a straight-line approach. The approach is used
Premium Depreciation Airline Delta Air Lines
INTEGRATIVE CASE 2.1 STARBUCKS ACCT218 a. Assuming that Starbucks had no significant permanent differences between book income and taxable income‚ did income before taxes for financial reporting exceed or fall short of taxable income for 2012? Explain. Taxable income before income tax is $2‚059 million‚ and taxable income should minus $674.4 million. So income before taxes exceeds taxable income. b. Will the adjustment to net income for deferred taxes to compute cash flow from operations in
Premium Generally Accepted Accounting Principles Depreciation Taxation
Chapter 9 Property Acquisition and Cost Recovery SOLUTIONS MANUAL Problems 39. [LO 1] Jose purchased a delivery van for his business through an online auction. His winning bid for the van was $24‚500. In addition‚ Jose incurred the following expenses before using the van: shipping costs of $650; paint to match the other fleet vehicles at a cost of $1‚000; registration costs of $3‚200 which included $3‚000 of sales tax and a registration fee of $200; wash and detailing for $50; and an engine
Premium Depreciation
to up – date the accounts at the end of the financial period Adjustments in respect of the following are required i) Prepaid Expenses ii) Accrued Expenses iii) Income Accrued iv) Income received in advance v) Bad Debts vi) Doubtful Debts vii) Depreciation a) Cash Basis Accounting - means that revenues and expenses are not recognized until the cash is received or paid - it ignores credit transactions b) Accrual Basis Accounting - means that revenue is recognized when earned and expenses when incurred
Premium Expense Generally Accepted Accounting Principles Balance sheet
revenue that can be used or reinvested in similar or future projects because it is money that has been received. If Caledonia chose to focus on the accounting profits the profit would be much lower because of depreciation. Since depreciation is considered an expense the greater the depreciation the greater the costs to the organization. What are the incremental cash flows for the project in years1 through 5 and how do these cash flows differ from accounting profits or earnings? Ans: The
Premium Generally Accepted Accounting Principles Depreciation Free cash flow
36-month‚ straight-line amortization period. 5) What was the effect on earnings per share of the change in depreciation method for “hit” tapes (assume that hit tapes made up 25% of new tape purchases‚ and that the average hit tape was owned for half the year)? EPS = NI-Pref Div / Avg Oustanding Common Stock. So if the depreciation method changes from straight-line to accelerated. More depreciation expense is recognized up front and NI decreases. So the EPS ratio decreases. 6) What was the effect on
Premium Depreciation