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Flounder Company and Novak Company are two companies that are similar in many respects. One difference is that Flounder Company uses the straight-line method and Novak Company uses the declining-balance method at double the straight-line rate. On January 2, 2020, both companies acquired the depreciable assets shown below. Asset Buildings Equipment Cost $320,000 140,000 Flounder Company Novak Company Salvage Value $30,000 4,000 Including the appropriate depreciation charges, annual net income for the companies in the years 2020, 2021, and 2022 and total income for the 3 years were as follows. 2020 $82,500 70,000 Useful Life 40 years 10 years 2021 $86,900 78,000 2022 $88,500 87,000 Total $257,900 235,000 At December 31, 2022, the balance sheets of the two companies are similar except that Novak Company has more cash than Flounder Company, and net property, plant, and equipment are different. Lynda Peace is interested in buying one of the companies. She comes to you for advice.

Flounder Company and Novak Company are two companies that are similar in many respects. One difference is that Flounder Company uses the straight-line method and Novak Company uses the declining-balance method at double the straight-line rate. On January 2, 2020, both companies acquired the depreciable assets shown below. Asset Buildings Equipment Cost $320,000 140,000 Flounder Company Novak Company Salvage Value $30,000 4,000 Including the appropriate depreciation charges, annual net income for the companies in the years 2020, 2021, and 2022 and total income for the 3 years were as follows. 2020 $82,500 70,000 Useful Life 40 years 10 years 2021 $86,900 78,000 2022 $88,500 87,000 Total $257,900 235,000 At December 31, 2022, the balance sheets of the two companies are similar except that Novak Company has more cash than Flounder Company, and net property, plant, and equipment are different. Lynda Peace is interested in buying one of the companies. She comes to you for advice.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Flounder Company and Novak Company are two companies that are similar in many respects. One difference is that Flounder Company uses the straight-line method and Novak Company uses the declining-balance method at double the straight-line rate. On January 2, 2020, both companies acquired the depreciable assets shown below. Asset Buildings Equipment Cost $320,000 140,000 Flounder Company Novak Company Salvage Value $30,000 4,000 Including the appropriate depreciation charges, annual net income for the companies in the years 2020, 2021, and 2022 and total income for the 3 years were as follows. 2020 $82,500 70,000 Useful Life 40 years 10 years 2021 $86,900 78,000 2022 $88,500 87,000 Total $257,900 235,000 At December 31, 2022, the balance sheets of the two companies are similar except that Novak Company has more cash than Flounder Company, and net property, plant, and equipment are different. Lynda Peace is interested in buying one of the companies. She comes to you for advice.
Transcribed Image Text:Flounder Company and Novak Company are two companies that are similar in many respects. One difference is that Flounder Company uses the straight-line method and Novak Company uses the declining-balance method at double the straight-line rate. On January 2, 2020, both companies acquired the depreciable assets shown below. Asset Buildings Equipment Cost $320,000 140,000 Flounder Company Novak Company Salvage Value $30,000 4,000 Including the appropriate depreciation charges, annual net income for the companies in the years 2020, 2021, and 2022 and total income for the 3 years were as follows. 2020 $82,500 70,000 Useful Life 40 years 10 years 2021 $86,900 78,000 2022 $88,500 87,000 Total $257,900 235,000 At December 31, 2022, the balance sheets of the two companies are similar except that Novak Company has more cash than Flounder Company, and net property, plant, and equipment are different. Lynda Peace is interested in buying one of the companies. She comes to you for advice.
Determine the annual depreciation recorded by each company during the 3 years. Flounder Company Novak Company 2020 $ 2021 $ 2022 $ Flounder Company $ Novak Company $ Determine the total accumulated depreciation recorded by each company during the 3 years. Total Accumulated Depreciation $
Transcribed Image Text:Determine the annual depreciation recorded by each company during the 3 years. Flounder Company Novak Company 2020 $ 2021 $ 2022 $ Flounder Company $ Novak Company $ Determine the total accumulated depreciation recorded by each company during the 3 years. Total Accumulated Depreciation $
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