Chapter 11, Problem 1C

1.

To determine

State the difference between operating and capital expenditure and describe why this distinction is important.

2.

To determine

Explain the depreciation used in accounting.

3.

To determine

Indicate the factors that determine the annual depreciation expenses and describe whether these factors are computed objectively or based on judgment.

4.

To determine

State the reason for showing the depreciation expense in the net cash flow from operating activities section of the statement of cash flows.