If ending inventory on the last day of the year is overstated by $9,000, what is the effect on Net
Income for the current year? Assume a tax rate of 0%.
a. Net Income for the current year will be overstated by $9,000.
b. Net Income for the current year will be understated by $9,000.
c. Cost of Goods Sold for the current year will be overstated by $9,000.
d. Cost of Goods Sold for the current year will be understated by $9,000.
Candy Co. purchased a machine on January 1, 2011, for $300,000. At the time of purchase, the machine was estimated to have a life of 8 years and a residual value of $10,000. In 2015, The company determined that the machine had a total useful life of 10 years (another 6 years left) and a residual value of $20,000. If the company uses the straight-line method of depreciation, what will be the depreciation expense for the machine in 2015?
On September 1, 2018, Speaker Company purchased equipment for $66,000, and installation costs totaled $5,000. The equipment has an estimated useful life of 8 years and an estimated salvage value of $3,000. If the company uses the straight line method, the depreciation expense for 2018 would be:
Bren Company purchased a patent for $36,000. The patent is expected to have a finite life of 10 years even though its legal life is 17 years. The amortization for the first year is:
a. None of these.
The book value of an asset represents:
a. the market value of the asset
b. The historical cost of the asset net of accumulated depreciation
c. The market value of the asset net of accumulated depreciation
d. The historical cost of the asset