Each of the following statements represents a decision made by the accountant of Growth Industries: a. A tornado destroyed $200,000 in uninsured inventory. This loss is included in the cost of goods sold. b. Land was purchased 10 years ago for $50,000. The accountant adjusts the land account to $100,000, which is the estimated current value. c. The cost of machinery and equipment is charged to a fixed asset account. The machinery and equipment will be expensed over the period of use. d. The value of equipment increased this year, so no depreciation of equipment was recorded this year. e. During the year, inventory that cost $5,000 was stolen by employees. This loss has been included in the cost of goods sold for the financial statements. The total amount of the cost of goods sold was $1 million. f. The president of the company, who owns the business, used company funds to buy a car for personal use. The car was recorded on the company's books. State whether you agree or disagree with each decision.
Each of the following statements represents a decision made by the accountant of Growth Industries: a. A tornado destroyed $200,000 in uninsured inventory. This loss is included in the cost of goods sold. b. Land was purchased 10 years ago for $50,000. The accountant adjusts the land account to $100,000, which is the estimated current value. c. The cost of machinery and equipment is charged to a fixed asset account. The machinery and equipment will be expensed over the period of use. d. The value of equipment increased this year, so no depreciation of equipment was recorded this year. e. During the year, inventory that cost $5,000 was stolen by employees. This loss has been included in the cost of goods sold for the financial statements. The total amount of the cost of goods sold was $1 million. f. The president of the company, who owns the business, used company funds to buy a car for personal use. The car was recorded on the company's books. State whether you agree or disagree with each decision.
Chapter8: Depreciation And Sale Of Business Property
Section: Chapter Questions
Problem 6MCQ: Which of the following is not true about the MACRS depreciation system: A salvage value must be...
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Transcribed Image Text:Each of the following statements represents a decision made by the
accountant of Growth Industries:
a. A tornado destroyed $200,000 in uninsured inventory. This loss is
included in the cost of goods sold.
b. Land was purchased 10 years ago for $50,000. The accountant
adjusts the land account to $100,000, which is the estimated current
value.
c. The cost of machinery and equipment is charged to a fixed asset
account. The machinery and equipment will be expensed over the
period of use.
d. The value of equipment increased this year, so no depreciation of
equipment was recorded this year.
e. During the year, inventory that cost $5,000 was stolen by employees.
This loss has been included in the cost of goods sold for the financial
statements. The total amount of the cost of goods sold was $1 million.
f. The president of the company, who owns the business, used
company funds to buy a car for personal use. The car was recorded on
the company's books.
State whether you agree or disagree with each decision.
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