Wildhorse Company purchased land and a building on January 1, 2022. Management’s best estimate of the value of the land was $130,000 and of the building $260,000. However, management told the accounting department to record the land at $286,000 and the building at $104,000. The building is being depreciated on a straight-line basis over 15 years with no salvage value. Calculate the annual charge in net income = $ Why do you suppose management requested this accounting treatment? Is it ethical?
Wildhorse Company purchased land and a building on January 1, 2022. Management’s best estimate of the value of the land was $130,000 and of the building $260,000. However, management told the accounting department to record the land at $286,000 and the building at $104,000. The building is being depreciated on a straight-line basis over 15 years with no salvage value. Calculate the annual charge in net income = $ Why do you suppose management requested this accounting treatment? Is it ethical?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Wildhorse Company purchased land and a building on January 1, 2022. Management’s best estimate of the value of the land was $130,000 and of the building $260,000. However, management told the accounting department to record the land at $286,000 and the building at $104,000. The building is being
Calculate the annual charge in net income = $
Why do you suppose management requested this accounting treatment? Is it ethical?
Transcribed Image Text:Wildhorse Company purchased land and a building on January 1, 2022. Management's best estimate of the value of the land was
$130,000 and of the building $260,000. However, management told the accounting department to record the land at $286,000 and
the building at $104,000. The building is being depreciated on a straight-line basis over 15 years with no salvage value.
Calculate the annual change in net income
$4
Why do you suppose management requested this accounting treatment? Is it ethical?
It is likely that management requested this accounting treatment
v and this practice is
to decrease the depreciation expense
to boost the net income
to reduce the net income
to increase the depreciation expense
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