CONNECT WITH LEARNSMART FOR BODIE: ESSE
CONNECT WITH LEARNSMART FOR BODIE: ESSE
11th Edition
ISBN: 2819440196222
Author: Bodie
Publisher: MCG
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Chapter 14, Problem 5CP

The information in the following table comes from the 2017 financial statements of QuickBrush Company and Smilewhite Corporation:

    Notes to the 2017 Financial statements
    QuickBrush Smilewhite
    Goodwill The company amortize Goodwill over 20 years. The company amortizes goodwill over 5 years.
    Property, Plant, and equipment The company uses a straight-line depreciation method over the economic lives of the assets, which range from 5 to 20 years for buildings. The company uses an accelerated depreciation method over the economic lives of the assets. which range from 5 to 20 years for buildings.
    Accounts receivable The company uses a bad-debt allowance of 2% of accounts receivable. The company uses a bad-debt allowance of 5% of accounts receivable.

Determine which company has the higher quality of earnings by discussing each of the three notes. (L0 144)

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