Dis - 3 -b.docx - Below please find Heathers approach to...

This preview shows page 1 out of 1 page.

Below please find Heather’s approach to this case: Original Cost: $42,000,000 Previous Annual Depreciation: (42,000,000/10 years) = &4,200,000 per year Depreciation up to date: $4,200,000 X 2 = $8,400,000 Book Value: $33,600,000 Write Down: $12,900,000 New Depreciable Base: $33, 600, 00 - $12,900,000 = $20,700,000 New Annual Depreciation: ($20,700,000/3years) = $6,900,000 per year Income of 2013 includes a depreciation of $6,900,000 and $12,900,000 in write down for a total of $19,800,000 of reduction in income. With the CEO’s approach there would be $8,600,000 less income before taxes I believe that the situation for Heather is an ethical one. Heather needs to decide is she wants to be ethical

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture