(a) Concept introduction: Straight Line Method : This method of depreciation gives an equal depreciation charge throughout the life of asset. Accelerated Depreciation: This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset. The effect of depreciation policy on getting higher net profit and lower current ratio .

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Answer 1

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Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

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Most decisions made by management impact the ratios analysts use to evaluate performance. Indicate (by letter) whether each of the actions listed below will immediately increase (I), decrease (D), or have no effect (N) on the ratios shown. Assume each ratio is less than 1.0 before the action is taken. CAn you explain how to solve these not just the answers? 1. Issuance of long-term bonds 2. Issuance of short-term notes 3. Payment of accounts payable 4. Purchase of inventory on account 5. Purchase of inventory for cash 6. Purchase of equipment with a 4-year note 7. Retirement bonds 8. Sale of common stock 9. Write-off of obsolete inventory 10. Purchase of short-term investment for cash 11. Decision to refinance on a long-term basis some currently maturing debt

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Answer 2

Question

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Answer 6

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

Answer 7

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

Answer 8

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

Answer 9

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

Answer 10

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Answer 11

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 13 - Prob. 1Q Ch. 13 - Prob. 2Q Ch. 13 - What is ratio analysis? Why is it useful? Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5Q Ch. 13 - Why are some analyses called horizontal and others...Ch. 13 - Slow Cellar’s current ratio increased from 1.2 to...Ch. 13 - From last year to this year. Colossal Company’s...Ch. 13 - From last year to this year, Berry Barn reported...Ch. 13 - Prob. 10Q

Solution Summary: The author introduces the FIFO and LIFO methods of depreciation.

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(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Want to see the full answer?

Chapter 13 Solutions

Solution Summary: The author introduces the FIFO and LIFO methods of depreciation.

Videos

(c) Concept introduction: Straight Line Method: This method of depreciation gives an equal depreciation charge throughout the life of asset. The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Want to see the full answer?

Chapter 13 Solutions

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.