Grey company uses declining balance amortization and

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(3) Grey Company uses declining-balance amortization and Brown Company uses straight-line amortization. Both companies commenced operations on January 1, 2006 and acquired equipment on that date. The equipment has a useful life of 10 years. If the 2 companies are identical in all respects except for the different amortization methods, which of the following statements is true? a) Grey Company will report higher net assets at the end of the first year. b) Grey Company will report higher net income for the first year. c) Grey Company will report higher retained earnings at the end of the second year. d) Grey Company will report lower net assets at the end of the second year.
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(4) Which of the following is true regarding recognition of an item in a company’s financial statements?
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  • Winter '10
  • JennyZhang
  • Balance Sheet, Revenue, Generally Accepted Accounting Principles, Grey Company, storage facility

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