Criticize the following quotation: “We shall have no diffi-culty in paying for new plant assets needed during the com-ing year because our estimated outlays for new equipment amount to only $80,000, and we have more than twice thatamount in our accumulated depreciation account at present.”

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 5C: The following two statements concern depreciation: 1. Because our plant was shut down for part of...
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Criticize the following quotation: “We shall have no diffi-
culty in paying for new plant assets needed during the com-
ing year because our estimated outlays for new equipment

amount to only $80,000, and we have more than twice that
amount in our accumulated depreciation account at present.”

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