ACCT205 Week 3 Discussions and Responses.docx

My response hi emily your response was clean and to

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My Response Hi Emily, Your response was clean and to the point. You explained how the LIFO/FIFO method is used to pull either from the top or the bottom, which makes sense. I have not watched the link you submitted yet, but I do intend to, I would like a clearer explanation of why a company would use one over the other as well.
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Thank you for offering this additional information. Considering the inventory-costing methods LIFO and FIFO, do you think the Sagehen Enterprise company would benefit if they chose to go with the FIFO method or if they continued using the LIFO method? Why? Discussion 1 Response 2 Kenisha Wrote LIFO is last in first out and FIFO is first in first out. The differences in the two is LIFO means the inventory that was acquired last are the ones used, sold or disposed of first. FIFO is the total opposite and means the first inventory is the first to be sold, used or disposed of first. Benefits of FIFO is that it gives us a better indication of the value ending inventory on the balance sheet and it also increased the net income because the inventory reported might be several years old is used to value the cost of goods sold. My Response Hi Kenisha, Good Post! I like the way you explained the differences of LIFO and FIFO inventory-costing methods. You also mentioned some of the benefits of FIFO. To realize the inventory cost allocation, according to our text “accountants use inventory cost flow assumptions.” Wainwright, (Ed.). (2012). The LIFO and FIFO methods are used in a systematic way to determine what cost would be for a product at ending inventory and what the cost of the goods sold are. What would be a benefit of Sagehen Enterprises to continue using LIFO? Wainwright, S. K. (Ed.). (2012). Principles of Accounting: Volume I [Electronic version]. Retrieved from Discussion 2 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 equipment for $100,000. Explain the concept of depreciation. Which of the following depreciation methods would you recommend: straight-line depreciation, double declining balance method, or an alternative method? My Response There are three specific methods that are used to allocate the depreciation value of equipment straight line, double-declining balance, and units of output. Depreciation occurs either by wear and tear or can even be caused by a drop in market price. The useful life of a product is depreciated over time. For instance, $100,000 was spent by my client for a piece of equipment, the annual depreciation value over a 5 year period, would be $100,000 because the equipment cost was $100,000. This means that the depreciation allocated $20,000 per year salvage value, totaling $100,000. The formula with no salvage value would be:
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