omissions of previous years but it does not include correction of accounting estimates made in earlier years. 5. AS 6: Depreciation Accounting- * It states the amount of depreciation of some assets to be charged. It is calculated using the Straight Line Method‚ Written down Value or any other method carefully selected. When the method of calculating depreciation is changed it must be applied to all previous years and deficiency or surplus due to change must be adjusted in the profit and
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calculate the corporate taxes is different compared to that of the production director’s. The pre-tax profits of the two approaches are different which lead to different after-tax profits. The methods for depreciation are different. That is： 1. Their depreciation methods are different. Depreciation is the reduction in the book value of an asset due to usage
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Dep. Machine and Equip- Business reason: had more machines and thus higher depreciation; client error: Not using the correct depreciation rates (too high for purchases) Auto Equip- Business reason: Purchased company car (sedan); Client error: classified personal automotive expenses to the company Acc Dep. Auto Equip- Business reason: More cars increased the depreciation amount; client error: not using the correct depreciation rates (too high to justify purchase) Accounts Payable- Business reason: Purchased
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through 5 and how do these cash flows differ from accounting profits or earnings? Free cash flows differ from accounting profits because they incorporate depreciation back into the equation. It is important to add back in the depreciation expense‚ since the item was actually purchased using cash previously and depreciation is not a cash-flow (Titman‚ Keown‚ & Martin‚ 2011). Free cash flows also look at the Capital Expenditures (CAPEX) and Working Capital. The CAPEX includes initial project
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Credit Prepaid Insurance 1‚800 1‚800 6) Supplies‚ Beginning Supplies Purchased Amount Paid Supplies‚ End of the Year $0 $200 $150 $40 Supplies‚ Ending $160 Debit 7) Invoice $4‚500 Credit Cash $4‚500 8) Bond and Associates Accumulated Depreciation Accounts Payable Accounts Receivable Cash Equipment Land Mortgage Payable Prepaid Insurance Supplies Unearned Revenue Wages Payable $23‚000 $8‚500 $12‚000 $3‚500 $44‚000 $21‚000 $45‚000 $7‚500 $2‚000 $6‚000 $4‚500 Current Liabilities $19‚000
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INVENTORY – PERIODIC INVENTORY SYSTEM In a Periodic Inventory System‚ no effort is made to keep up – to – date records of either the inventory or the cost of goods sold. Instead‚ these amounts are determined only periodically __ usually at the end of each year. It is used by very small businesses having manual accounting systems. Questions 1 – 3 (Meigns & Meigns)‚ Question 4 (Fess & Warren) Question 1:- Mach IV Audio uses periodic inventory system. One of the
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would be allocated for the Algerine War due to the possibility of the ships being in the dockyard rather than in full service. Jefferson was simply allocating the costs of the war in terms of accounting allocations per asset capitalization and depreciation. 3) Evaluate Jefferson’s reasoning in his 1822 letter. Do you agree with his logic? This letter does not specifically identify the cost of building the fleet‚ but it does compare the construction cost to the cost of maintaining the fleet
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controller’s bonus is based on the next income. It is the controller’s belief that the switch in inventory methods would increase the net income of the company. What are the differences between the LIFO and FIFO methods? D2: A variety of depreciation methods are used to allocate the cost of an asset to all of the accounting periods benefited by the use of the asset. Your client has just purchased a piece of equipm... Follow the link Now for full guide - https://bitly.com/1oJLnk3 When
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without showing the related debt. Companies improve the utilization of their assets via leasing since they can add capacity‚ as needed‚ a lot more easily by leasing rather than committing to own the assets. • They show no interest expense or depreciation in the income statement‚ although both of these are part of the “lease expense” account that does run through the income statement. • They avoid certain risks of ownership such as technological obsolescence‚ physical deterioration‚ etc.
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decreases * Depreciation expense - increases * Increase in investments - decreases * Decrease in accounts payable - decrease * Decrease in prepaid expenses - increases * Increase in inventory - decreases * Dividend payment - decreases * Increase in accrued expenses - decreases The Rogers Corporation has a gross profit of $880‚000 and $360‚000 in depreciation expenses. The Evans Corporation also has $880‚000 in gross profit‚ with $60‚000 in depreciation expense
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