3rd Edition

ISBN: 9780077506902

Author: David J Spieceland Wayne Thomas Don Herrmann

Publisher: Mcgraw-Hill

Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

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Textbook Question

Chapter 7, Problem 7.7APWC

Written Communication

At a recent luncheon, you were seated next to Mr. Fogle, the president of a local company that manufactures food processors. He heard that you were in a financial accounting class and asked:

“Why is it that I’m forced to record depreciation expense on my property when I could sell it for more than I originally paid? 1 thought that the purpose of the balance sheet is to reflect the value of my business and that the purpose of the income statement is to report the net change in value or wealth of a company. It just doesn't make sense to penalize my profits when the building hasn’t lost any value.”

At the conclusion of the luncheon, you promised to send him a short explanation of the rationale for current depreciation practices.

Required:

Prepare a memo to Mr. Fogle. Explain the accounting concept of depreciation and contrast this with the dictionary definition of depreciation.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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Chapter 7, Problem 7.5APE

Chapter 7, Problem 7.8APEM

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Chapter 7 Solutions

Financial accounting

Ch. 7 - Prob. 1RQ Ch. 7 - What are the two major categories of long-term...Ch. 7 - Prob. 3RQ Ch. 7 - Prob. 4RQ Ch. 7 - Prob. 5RQ Ch. 7 - Prob. 6RQ Ch. 7 - Equipment includes machinery used in manufacturing...Ch. 7 - Prob. 8RQ Ch. 7 - Prob. 9RQ Ch. 7 - Prob. 10RQ

Ch. 7 - Prob. 11RQ Ch. 7 - How do we decide whether to capitalize (record as...Ch. 7 - Explain the usual accounting treatment for repairs...Ch. 7 - Prob. 14RQ Ch. 7 - How is the dictionary definition different from...Ch. 7 - What factors must we estimate in allocating the...Ch. 7 - Prob. 17RQ Ch. 7 - Prob. 18RQ Ch. 7 - Prob. 19RQ Ch. 7 - Assume that Little King Sandwiches uses...Ch. 7 - Assume Little King Sandwiches depreciates a...Ch. 7 - Prob. 22RQ Ch. 7 - Prob. 23RQ Ch. 7 - What is book value? How do we compute the gain or...Ch. 7 - Prob. 25RQ Ch. 7 - Prob. 26RQ Ch. 7 - Prob. 27RQ Ch. 7 - Prob. 28RQ Ch. 7 - Determine the initial cost of land (LO71) Fresh...Ch. 7 - Prob. 7.2BE Ch. 7 - Prob. 7.3BE Ch. 7 - Compute research and development expense (LO72)...Ch. 7 - Prob. 7.5BE Ch. 7 - Explain the accounting definition of depreciation...Ch. 7 - BE7–7 El Tapitio purchased restaurant furniture on...Ch. 7 - Prob. 7.8BE Ch. 7 - Prob. 7.9BE Ch. 7 - Account for the sale of long-term assets (LO76)...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Prob. 7.13BE Ch. 7 - Determine the impairment loss (LO78) Vegetarian...Ch. 7 - Prob. 7.15BE Ch. 7 - McCoys Fish House purchases a tract of land and an...Ch. 7 - Orion Flour Mills purchased a new machine and made...Ch. 7 - Prob. 7.3E Ch. 7 - Prob. 7.4E Ch. 7 - Prob. 7.5E Ch. 7 - Prob. 7.6E Ch. 7 - Prob. 7.7E Ch. 7 - Prob. 7.8E Ch. 7 - Prob. 7.9E Ch. 7 - Determine depreciation for the first year under...Ch. 7 - Deformine depreciation under three methods (LO74)...Ch. 7 - E7–12 Togo’s Sandwiches acquired equipment on...Ch. 7 - E7–13 Tasty Subs acquired a delivery truck on...Ch. 7 - Prob. 7.14E Ch. 7 - Prob. 7.15E Ch. 7 - Prob. 7.16E Ch. 7 - Record the sole of equipment (L076) Abbott...Ch. 7 - Prob. 7.18E Ch. 7 - Prob. 7.19E Ch. 7 - Prob. 7.20E Ch. 7 - The Italian Bread Company purchased land as a...Ch. 7 - Prob. 7.2AP Ch. 7 - Prob. 7.3AP Ch. 7 - Prob. 7.4AP Ch. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6AP Ch. 7 - Prob. 7.7AP Ch. 7 - Prob. 7.8AP Ch. 7 - Prob. 7.9AP Ch. 7 - Calculate and interpret ratios (LO77) University...Ch. 7 - Prob. 7.1BP Ch. 7 - Determine the acquisition cost of equipment (LO71)...Ch. 7 - Prob. 7.3BP Ch. 7 - Prob. 7.4BP Ch. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6BP Ch. 7 - Prob. 7.7BP Ch. 7 - Record the disposal of equipment (LO76) Flip Side...Ch. 7 - Prob. 7.9BP Ch. 7 - Calculate and interpret ratios (LO77) Barry...Ch. 7 - Prob. 7.1APCP Ch. 7 - Prob. 7.2APFA Ch. 7 - Prob. 7.3APFA Ch. 7 - Prob. 7.4APCA Ch. 7 - Prob. 7.5APE Ch. 7 - Written Communication At a recent luncheon, you...Ch. 7 - Earnings Management Edward L. Vincent is CFO of...

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Solution Summary: The author compares the accounting concept of depreciation with the dictionary definition.

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