Accounting

ACT 500 Final Exam Review
1.

P85.

Req. 1
?a. Straight-line:
year| computer science| Depreciation Expense| Accumulated Depreciation| NetBook order|
At acquisition| | | | $106,000|
1| ($106,000 - $2,000) x 1/13| $8,000| $ 8,000| 98,000|
2| ($106,000 - $2,000) x 1/13| $8,000| 16,000| 90,000|

?b. Units-of-production: ($106,000 $2,000) 200,000 = $0.52 per unit of output
Year| numeration| Depreciation Expense| Accumulated Depreciation| NetBook Value|
At acquisition| | | | $106,000|
1| $0.52 x 20,000 units| $10,400| $10,400| 95,600|
2| $0.52 x 16,000 units| 8,320| 18,720| 87,280|

c. Double-declining-balance:
Year| Computation| Depreciation Expense*| Accumulated Depreciation| NetBook Value|
At acquisition| | | | $106,000|
1| ($106,000 - $0) x 2/13| $16,308| $16,308| 89,692|
2| ($106,000 - $16,308) x 2/13| 13,799| 30,107| 75,893|
*Rounded to the warm dollar.

Req.



2

Cash flowâ€"For tax purposes, the declining-balance (DB) method usually is viewed as preferable because an early tax deduction is preferable to a ulterior tax deduction. DB depreciation expense is highest; therefore, it yields pull down taxable income and therefore depress income tax payable (and lower cash outflow) in the early years. In later years, this nucleus would reverse. Other than cash outflows for taxes, cash flows are unaffected by the method chosen by management for financial reportage purposes. Companies may select different methods for tax and financial reporting.

intractable asset turnoverâ€"The DB method would be about favorable for fixed asset turnover. Because this depreciation method yields the highest substance of depreciation expense, it yields the lowest level of net fixed assets and thus the highest fixed asset turnover during the early years. In later years, this effect...If you want to get a full essay, order it on our website: Ordercustompaper.com



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