Depreciation

Even though Mr. Fordham mentions that he in his “Statement of Cost of Goods Manufactured for Year Ended Dec. 31 1956” that he depreciated $24,000 of Plant and Equipment, I decided to change the depreciation schedule so that PP&E would be fully depreciated by the end of the 5 year period. Thus, I used a straight-line depreciation schedule that accumulated $40,000 worth of depreciation per year, which was spread evenly across the 12 months of this Balance Sheet (or $3,333.33 per month).

For the depreciation part, we adopted the straight-line method. Here since the depreciation of year 1984 was $1270, we just assumed all the depreciation amount to be equal to $1270 till the year 1989. With all of these previous assumptions, we obtain the complete pro forma financial statement and the cash flow table for the Collinsville Plant.

1. The first step to evaluating the cash flows is to conduct the depreciation tax flow analysis. Depreciation is not a cash flow, but the depreciation expense lows the taxes payable for the company. As a result, the tax effect of deprecation needs to be calculated as a cash flow. There are two depreciable items on the company's balance sheet the building and the equipment. The equipment is known to have a seven year depreciable life, which will be assumed to be straight line. The building is also assumed to be subject to straight line depreciation, this time of forty years. The tax saving reflects the depreciation expense multiplied by the tax rate, which in this case is assumed to be 28%. The following table illustrates the tax effect in future dollars of the depreciation expense:

Refer as needed to material in Chapters 12 and 13. Read the instructions carefully and answer all questions clearly and concisely. Include examples to highlight your comments.

Guidelines: You may use all of the resources (e.g., textbook, other books, websites) available to you, EXCEPT FOR OTHER PEOPLE. Your work must be done individually. Any exams that appear similar in format and/or answers will be considered to have been done in a group setting. All such exams will receive a score of 0. Late exams will not be accepted for any reason. Any late exams will receive a score of 0. These policies will be strictly enforced.

Review each scenario below, and choose one to complete for your assignment. Each scenario contains specific questions that will ask you to provide examples, explain your suggestions for improvement, and refer to the lesson. Be sure to respond to each question in complete sentences.

Directions: Read the case study below and complete the questions at the end. You will form small groups in class to collaborate and produce your final answer.

What influence should the depreciation on the facilities at Clayton have on prices charged by Clayton for its services?

Answer Questions 1 through 6 based on the scenario in the “Theory to Practice” section, and complete the following in your response:

Depreciation is required for assets with future economic benefit or service potential by FASB. This does not include land used as a building site or historical treasures. Historical treasures are defined as assets with historical value that is preserved perpetually or assets with service potential that the NFP has the ability to protect (and is currently protecting). Fixed assets such as office equipment, building for operations, etc. are depreciated over the useful life. For example, Millersville University depreciates their laboratory and audio/visual equipment over a useful life of 7 years (Millersville University, 2015). These assets are also subject to impairment-testing.

My compensation is not contingent upon the reporting of a predetermined true cash value or direction in true cash value

Once you have read the textbook chapter and the Reading, answer discussion questions 1, 3- 5 (ignore questions 2 and 6).

Note: Use the above scenario to answer ONLY TASK 1 & 2. And read through all of the tasks carefully so that you know what you will need to do to complete this assignment in a fully written report.

Like IFRS, reports prepared under US GAAP are presented: (i) statement of financial position, (ii) statement of comprehensive income, (iii) statement of changes in equity, (iv) statement of cash flows, and (v) notes including accounting policies.

The purpose of the depreciation policy is to ensure that consistent principles are applied in respect of the measurement, valuation and depreciation of a tangible fixed asset. The Academies Accounts