Fundamental Accounting Principles
24th Edition
ISBN: 9781259916960
Author: Wild, John J., Shaw, Ken W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 26, Problem 10DQ
Google managers must select depredation methods. Why does the use of the accelerated
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What is a modified accelerated cost recovery system(MACRS)? Speculate as to why this system is nowrequired for tax purposes.
Which of the following statements is false?
A
For tax purposes, companies can use the MACRS depreciation method.
B
When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings.
C
If the expected future cash flow is less than the carrying amount, the asset is considered impaired.
D
If an impairment loss is recorded, depreciation must be recalculated since the book value changed.
Which of the following statements is false?
A
For tax purposes, companies can use the MACRS depreciation method.
B
When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings.
C
If the expected future cash flow is less than the carrying amount, the asset is considered impaired.
D
If an impairment loss is recorded, depreciation must be recalculated since the book value changed.
The answer A is wrong
Chapter 26 Solutions
Fundamental Accounting Principles
Ch. 26 - Prob. 1DQCh. 26 - Prob. 2DQCh. 26 - Prob. 3DQCh. 26 - Prob. 4DQCh. 26 - Prob. 5DQCh. 26 - Prob. 6DQCh. 26 - Prob. 7DQCh. 26 - Prob. 8DQCh. 26 - Prob. 9DQCh. 26 - Google managers must select depredation methods....
Ch. 26 - Prob. 11DQCh. 26 - Prob. 12DQCh. 26 - Prob. 13DQCh. 26 - Prob. 14DQCh. 26 - Prob. 15DQCh. 26 - Prob. 1QSCh. 26 - Prob. 2QSCh. 26 - Prob. 3QSCh. 26 - Prob. 4QSCh. 26 - Prob. 5QSCh. 26 - Prob. 6QSCh. 26 - Prob. 7QSCh. 26 - Prob. 8QSCh. 26 - Prob. 9QSCh. 26 - Prob. 10QSCh. 26 - Prob. 11QSCh. 26 - Prob. 13QSCh. 26 - Prob. 14QSCh. 26 - Prob. 15QSCh. 26 - Prob. 16QSCh. 26 - Prob. 17QSCh. 26 - Prob. 18QSCh. 26 - Prob. 1ECh. 26 - Prob. 2ECh. 26 - Prob. 3ECh. 26 - Prob. 4ECh. 26 - Prob. 5ECh. 26 - Prob. 6ECh. 26 - Prob. 7ECh. 26 - Prob. 8ECh. 26 - Prob. 9ECh. 26 - Prob. 10ECh. 26 - Prob. 11ECh. 26 - Prob. 12ECh. 26 - Prob. 13ECh. 26 - Prob. 14ECh. 26 - Prob. 15ECh. 26 - Prob. 16ECh. 26 - Prob. 17ECh. 26 - Prob. 18ECh. 26 - Prob. 1APSACh. 26 - Prob. 2APSACh. 26 - Prob. 3APSACh. 26 - Prob. 4APSACh. 26 - Prob. 5APSACh. 26 - Prob. 6APSACh. 26 - Prob. 1BPSBCh. 26 - Prob. 2BPSBCh. 26 - Prob. 3BPSBCh. 26 - Prob. 4BPSBCh. 26 - Prob. 5BPSBCh. 26 - Prob. 6BPSBCh. 26 - Prob. 26SPCh. 26 - Prob. 1AACh. 26 - Prob. 2AACh. 26 - Prob. 3AACh. 26 - Prob. 1BTNCh. 26 - Prob. 2BTNCh. 26 - Prob. 3BTNCh. 26 - Prob. 4BTNCh. 26 - Read the chapter opener about Marco Mascorro and...Ch. 26 - Prob. 6BTN
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- Discuss the difference between the straight-line method of depreciation and the accelerated methods. Why do companies use different depreciation methods for tax reporting and financial reporting?arrow_forward“When evaluating projects, we’re concerned with only the relevant incremental after-tax cash flows. Therefore, because depreciation is a non-cash expense, we should ignore its effects when evaluating projects.” Critically evaluate this statement.arrow_forwardd) Explain intuitively how a manager could tweak the salvage value of machinery to benefit from an expected reduction in the corporate tax rate taking place towards the end of an investment.arrow_forward
- When determining the best time to replace an existing asset, for what reason would you need to use marginal analysis?a. To determine what the most appropriate tax rate for the project should beb. To estimate the cost of capital for the new assetc. To determine if the defender asset should be used beyond its ESL.d. To determine the length of time the challenger asset should be used once it is placed into service.arrow_forwardWhich of the following statements are true? Select one or more: a. MACRS must be used for book purposes if it is used for tax purposes. b. Managers often prefer the straight-line method because it helps to smooth earnings. c. Units of production method is not appropriate for natural resources. d. Double-declining balance recognizes more depreciation expense early in an asset's life. PreviousSave AnswersNextarrow_forwardwe know that depreciation is linked to the net cash flows of the company's investments. In fact, any increase in depreciation amounts leads to an increase in net cash flows because: a. reduces investment-related taxesb. increases investment-related taxesc. increases the tax rate on investment gainsd. reduces the discount rate of investmentsarrow_forward
- Which of the following statements is true? a. The fixed asset turnover ratio assists managers in determining the estimated future capital expenditures that are needed. b. The average age of the fixed assets is computed by dividing accumulated depreciation by depreciation expense. c. If net sales increases, the fixed asset turnover ratio will decrease. d. A relatively low fixed asset turnover ratio signals that a company is efficiently using its assets.arrow_forwardThe modified internal rate of return (MRR) test is designed to address a limitation associated withthe use of the internal rate of return (IRR). What is that limitation?a) Working capital requirementb) Income taxesc) Reinvestment rated) Depreciation expensearrow_forwardWhich of the following characteristics would an investor place a greater priority on for a short-term investment than for a long-term investment? Tax considerations Liquidity of the investment How often the investment rate compounds Length of the investment periodarrow_forward
- Which one of the following is a soft benefit? Depreciation tax shield Reduction in the number of items spoiled during processing Enhanced reputation of the company Decreased time to receive and process customers’ paymentsarrow_forwardAnswer the following questions in depth .... Why do accountants have to classify items as capital or revenue expenditures? Why do you treat exchanges of similar and dissimilar assets differently? Aren't they all exchanges? Is it true that the higher the depreciation, the lower the net income? If that is the case, why would we not want the lowest depreciation method so we can show the highest net income? Why do we have various methods of depreciation? Isn't that encouraging misleading results?arrow_forwardAdjusted present value technique is a technique that A) adjusts conventional present value for nonconstant cash inflows B) suggests separating tax savings from interest in the cash flows within the valuation process C) is used to value a project for a multinational corporation D) simply adjusts the conventional present value for nominal interestarrow_forward
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