After merging with Northwest Airlines , Delta Airlinesincreased the estimated useful life and increased theestimated residual value of its flight equipment. All elseequal, how will each of these changes affect Delta’sDepreciation Expense and Net Income?
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After merging with Northwest Airlines , Delta Airlines
increased the estimated useful life and increased the
estimated residual value of its flight equipment. All else
equal, how will each of these changes affect Delta’s
Step by step
Solved in 2 steps
- Which of the following statements if not true? a. Depreciation is the process of allocating the purchase price of an asset minues its residual value to expense, for each period benefited by the asset. b. The cost of an asset includes all acquisition costs necessary to obtain the benefits to be derived from the asset. c. The service life of an asset is the measure of the number of years of service expected from the asset before its disposal. d. The residual value of an asset is the difference between the expected book value of the asset at the end of its service and the cost of disposal.The fuel and oil as a major line of business of San Miguel Enterprises becomesavailable for immediate sale in its present condition. The termination costs ofemployees resulting from the discontinuance should be:A. Included in the computation of other comprehensive incomeB. Shown as other expenseC. Shown as a prior period adjustmentD. Netted against the income from operations of the component as part ofdiscontinued operationE. None of themIn Able Company’s efforts to estimate a value for Baker Company's goodwill, Able is estimating Baker Company's expected future earnings. Able is using Baker's past earnings to project the future earnings. Which of the following items should be eliminated from Baker's past earnings in order to project future earnings? Extraordinary items Amortization expense for identifiable intangibles a. Yes Nob. Yes Yesc. No Yesd. No No
- 1. A company is deciding whether to exchange an old asset for a new asset. Within the context of the exchange decision, and ignoring income tax considerations, the undepreciated book value of the old asset would be considered a(an) Sunk cost Irelevant cost No No Yes No No Yes d. Yes Yes 2. Expected future costs that will differ among alternatives a. Opportunity cost. b. Relevant costs. c. Sunk cost. d. Out-of-pocket costs.Entity A recognizes a gain of P100 from the change in FVLCS of its biological assets during the period. If the change in FVLCS due to price change is P70, the change in FVLCS due to physical change must be P40. True or False. Please explain.Which of the following will maximize net income by minimizing depreciation expense in the first year of the asset’s life? a. Short service life, high residual value, and straightline depreciation.b. Long service life, high residual value, and straightline depreciation.c. Short service life, low residual value, and doubledeclining- balance depreciation.d. Long service life, high residual value, and doubledeclining- balance depreciation.
- Current Attempt in Progress Crane Ltd., a private company based in Vancouver, decided to sell its Industrial Design Division. After two years of losses and heavy competition, a plan to dispose of the division was put in place. At the end of 2023, the plan was finalized and approved by the board of directors. The sale is anticipated to be completed by June 30, 2024. Other information: 1. 2. 3. Crane's 2023 after-tax income (excluding the results from the Industrial Design Division) was $472,500. During the year, the division reported an after-tax loss of $126,000 (revenues: $31,500, expenses: $157,500). Management estimates that after-tax legal fees of $33,600 as well as after-tax severance payments of $69,300 will be required to finalize the disposal plan. A portion of these costs is expected to be offset by the after-tax proceeds of $64,100 from the sale of the division's assets. Assuming the Industrial Design Division qualifies for treatment as a discontinued operation, prepare a…A non-current asset was acquired for $200,000 on 200-day terms. Which of the following statements regarding the $200,000 is correct? Group of answer choices It is an expenditure, but not a cost nor an expense. It is not a cost, nor an expenditure, nor an expense. It is a cost, but not an expenditure nor an expense. It is a cost and an expenditure, but not an expense. It is a cost and an expense, but not an expenditure.19. In ABC Food Co.'s 2023 single-step income statement, the section titled "Revenues" consisted of the following: Net sales revenue Results from discontinued operations: Loss from discontinued component Z including loss on disposal of P1,200 Less: Tax benefit Interest revenue Gain on sale of equipment Cumulative change in 2021 and 2022 income due to change in depreciation method (net of P750 tax effect) Total revenues 16,400 4,000 187,000 (12,400) 10,200 4,700 1,500 191,000 In the revenues section of the 2023 income statement, how much total revenue should ABC Food report?
- The depreciation method used shall reflect the pattern in which the asset’s future economic benefits areexpected to be consumed by the entity. Which statement is incorrect regarding depreciation methods?a. Straight-line depreciation results in a constant charge over the useful life if the asset’s residual value does not change.b. The diminishing balance method results in a decreasing charge over the useful lifec. The units of production method results in a charge based on the expected use or outputd. A depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is appropriate.A company wishes to report the highest earnings possibleaccording to GAAP. Therefore, when calculating depreciation for financial reporting purposes,a. It will follow the MACRS depreciation rates prescribedby the IRS.b. It will estimate the shortest lives possible for itsassets.c. It will estimate the longest lives possible for its assets.d. It will estimate lower residual values for its assets.Which costs does a company expense AFTER a long-term asset is put into use in the business? O Routine costs O Extraordinary costs O All after acquisition costs O None of the above SUBMIT
