What is the effect on the profits for 2012 and 2013 if depreciation on a fixed asset is omitted in 2012 end-of-year adjustments?profit 2012 overstated, profit 2013 understatedOprofit 2012 understated, profit 2013 no effectO profit 2012 overstated, profit 2013 no effectO profit 2012 overstated, profit 2013 overstated

Step 1:Answer is Option C -----> Profit 2012 Overstated and Profit 2013 no effect.Step 2:Note :…

Answered: What is the effect on the profits for…

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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Just for clarification purposes, is the 50 000 a sunken cost and should it have been accounted for in the cash flow? The question states 800 000 after tax, but the adjustments were taken into account hence the after tax is 760 000. Please clarify.
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Which of the following will decrease free cash flow
Problem: Recognition and Measurement in Interim Periods Athena Corp. reports profit before tax of P 1,000,000 I its 2nd quarter interim financial statements before consideration for the following: Inventory with a carrying amount of P 100,000 has a net realizable value of P 80,000. It is expected that the decline in value will reverse in the 3rd An investment property measured under the cost model has a carrying amount of P 250,000 but its recoverable amount is P 210,000. An investment in FVPL measured at acquisition cost of P 20,000 has a fair value of P 25,000 as at the end of the 2nd However, the increase in fair value is expected to be only temporary. No depreciation is recognized during the 2nd The annual depreciation under the straight-line method of items of PPEs is P 360,000. Athena Corp. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are vesting and accumulating. Total paid vacation leaves eligibility of employees for the full…
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Lynch Corporation changes from the sum-of-the-years’-digits method of depreciation for existing assets to the straight-line method. How should the change be reported? Explain.
A company is considering expanding its production line. Cost for the the equipment for the expansion: Annual incease in sales: Number of years of the project: Annual operating costs other than depreciation: The company's tax rate: There is no change in Working Capital $200,000 $125,000 3 $50,000 35% The equipment will be depreciated on a 3 year straight line basis with 0 salvage value. At the end of 3 years the equipment disposed of at no cost or sale. Calcualte the Net Free Cash Flow for years 0 and 1 only as listed below. Do not use commas, decimals, or dollar signs. Enter negative numbers with a minus sign.
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Depreciation as a Tax Shield The term tax shield refers to the amount of income tax saved by deducting depreciation for income tax purposes. Assume that Supreme Company is considering the purchase of an asset as of January 1, 2017. The cost of the asset with a five-year life and zero residual value is $123,300. The company will use the straight-line method of depreciation. Supreme's income for tax purposes before recording depreciation on the asset will be $46,900 per year for the next five years. The corporation is currently in the 30% tax bracket. Required: Calculate the amount of income tax that Supreme must pay each year if the asset is and is not purchased. 1. Amount of taxes paid if asset is not purchased is: $fill in the blank 1 2a. Amount of depreciation if asset is purchased is: $fill in the blank 2 b. Amount of taxes paid if asset is purchased is: $fill in the blank 3 3. What is the amount of the depreciation tax shield? $fill in the blank 4
Decrease in plant and equipment $ Decrease in deferred tax asset $ Increase in accounts receivable $ Net Loss $ 122,865 587,458 15,487 65,892 109,520 215,877 Increase in inventory $ Decrease in short-term debt $ Net cash from financing activities Net cash from investing activities Net cash from operating activities
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