to the tax authorities. Explain how both of these
Blake furniture recently purchased new equipment for its plant. The list price of the equipment was $40,000. Company paid sales taxes of $2,100 at the date of purchase. Freight charges for the
equipment totaled $680. Installation and training costs related to the equipment amounted to $900. During installation, one of the pieces of equipment was accidentally damaged It cost $400 to repair this damage. Blake furniture will
a. Prepare depreciation schedule.
b. Give reasons for switching to
c. Management wants to report the highest possible earnings in its financial statements, yet it also wants to minimize its taxable income reported to the tax authorities. Explain how both of these
objectives can be met.
d. Do you agree that depreciation is often considered as major source of funds? Why?
e. Which tangible assets are depreciated and which are not, why?
f. A rental agency collects rent in advance. Why the rent is collected treated as a liability/asset? In
which category this liability/asset will be classified into and how would you record it? Where should it appear in the financial statements?
g. The only accurate way to account for the success or failure of an entity is to accumulate all transactions from the opening of business until the business eventually liquidates. Comment and
explain whether this is true or not. Moreover, how do you think the concept of consistency aid in the analysis of financial statements? What type of accounting disclosure is required if this concept is not applied?
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