Movieplex Entertainment Case Study
David,
I agree increasing the depreciation period would lower depreciation expense increasing net income. This would cause higher taxes for the owners of Movieplex. You make a good point that the lessee is taking a chance on these improvements as they may decide to not renew their lease. I also think revising the estimate would pose an ethical dilemma as it boosts net income giving a misrepresentation of a company’s profits.
Lisa
Darren,
I like how detailed your post is and that you did the calculations. I do agree with you that expanding the depreciation period to 25 years would have an effect on net income as well as taxes. If Movieplex decided to go with Person’s suggestion the owner would be affected like you said along with investors
I agree increasing the depreciation period would lower depreciation expense increasing net income. This would cause higher taxes for the owners of Movieplex. You make a good point that the lessee is taking a chance on these improvements as they may decide to not renew their lease. I also think revising the estimate would pose an ethical dilemma as it boosts net income giving a misrepresentation of a company’s profits.
Lisa
Darren,
I like how detailed your post is and that you did the calculations. I do agree with you that expanding the depreciation period to 25 years would have an effect on net income as well as taxes. If Movieplex decided to go with Person’s suggestion the owner would be affected like you said along with investors