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E-Cars Ltd's factory equipment has an initial cost of $100,000 when purchased in 2015. It's current carrying amount is $20,000. The equipment contributes equally to the profitability of the company over its useful life. Question: What bias is the depreciation policy likely to cause to E-Cars Ltd's reported Return on Equity in 2021.

E-Cars Ltd's factory equipment has an initial cost of $100,000 when purchased in 2015. It's current carrying amount is $20,000. The equipment contributes equally to the profitability of the company over its useful life. Question: What bias is the depreciation policy likely to cause to E-Cars Ltd's reported Return on Equity in 2021.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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E-Cars Ltd's factory equipment has an initial cost of $100,000 when purchased in 2015. It's current carrying amount is $20,000. The equipment contributes equally to the profitability of the company over its useful life. Question: What bias is the depreciation policy likely to cause to E-Cars Ltd's reported Return on Equity in 2021.
Transcribed Image Text:E-Cars Ltd's factory equipment has an initial cost of $100,000 when purchased in 2015. It's current carrying amount is $20,000. The equipment contributes equally to the profitability of the company over its useful life. Question: What bias is the depreciation policy likely to cause to E-Cars Ltd's reported Return on Equity in 2021.
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