do w me obj1 - COMPUTATION OF INCOME USING MATCHING...

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PRACTICE 4 - 1 FINANCIAL CAPITAL MAINTENANCE Net assets, end of period $ 345,000 Net assets, beginning of period 170,000 Increase in net assets $ 175,000 Deduct investment by owners 100,000 Income $ 75,000 PRACTICE 4 - 2 PHYSICAL CAPITAL MAINTENANCE Net assets, end of period $ 345,000 Net assets, beginning of period 170,000 Increase in net assets $ 175,000 Deduct investment by owners 100,000 Income, financial capital maintenance $ 75,000 Deduct increase necessary to maintain physical capital 65,000 Income, physical capital maintenance $ 10,000 PRACTICE 4 -
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Unformatted text preview: COMPUTATION OF INCOME USING MATCHING Revenue ($150,000 + $91,000) $ 241,000 Cost of goods sold ($79,000 + $46,000) 125,000 Income $ 116,000 The $350,000 in costs incurred in the production of Machines B and D will not yet be recognized as an expense. This expense is matched and reported in the income statement in the same year in which the revenue from the sale of the machines is reported. In the meantime, this $350,000 cost is shown as an asset, Inventory, in the balance sheet....
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