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Why Do These Three Companies Depreciate The Same Equipment Using Different Useful Lives?

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ACCTNG 3402 – Financial Accounting and Reporting II Assignment due February 13, 2013

Spring, 2013

Depreciation: Airplanes and Garbage Trucks
Your answers to the questions below should be clear, well-written, free of grammar and spelling errors, double-spaced with margins of at least one inch on all sides, and word-processed. In preparing this assignment, you may discuss the issues with each other or with anyone else, but your written answers must be your own work. If you need to quote someone else in your answer, you must give credit to your source. This assignment is due at the beginning of class on February 13, and should be printed and submitted in hard copy in class. No late papers will be accepted. If you cannot be in class on …show more content…

Northwest Delta Book Value January 1, 2005 Residual Depreciable amount Useful life Annual Depreciation Accumulated Depreciation at December 31, 2008 Book Value at December 31, 2008 Sale Price I Gain (Loss) on Sale I Sale Price II Gain (Loss) on Sale II United

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2) Why would these three companies depreciate the same equipment using different useful lives? Describe at least two possible explanations. 3) Which set of sale prices (I or II) do you think is more realistic? Why?

Part II: Garbage Trucks Read the Securities Exchange Commission (SEC) complaint against Waste Management, Inc. at http://www.sec.gov/litigation/complaints/complr17435.htm, especially paragraphs 1-19, 30-81, and 344-357, and the announcement of the settlement with Arthur Andersen LLP at http://www.sec.gov/news/headlines/andersenfraud.htm. These SEC materials will tell you about the terms of Andersen’s settlement with the SEC, but they do not tell you what happened next. To learn that, you should look at news articles from the spring of 2002. Two of them that might help are: “Waste Management Executives Are Named in S.E.C. Accusation”, New York Times, March 27, 2002: http://www.nytimes.com/2002/03/27/business/waste-management-executives-are-named-insec-accusation.html “Enron's Many Strands: The Trial; Judge Says Andersen's Past Can Be Evidence” New York Times, May 8, 2002:

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