Determining the definition of depreciation

Reference no: EM13953410

Depreciation

Jenner Inc., a graphic arts studio, is considering the purchase of computer equipment and soft- ware for a total cost of $18,000. Jenner can pay for the equipment and software over three years at the rate of $6,000 per year. The equipment is expected to last 10 to 20 years, but because of changing technology, Jenner believes it may need to replace the system in as soon as three to five years. A three-year lease of similar equipment and software is available for $6,000 per year. Jen- ner's accountant has asked you to recommend whether the company should purchase or lease the equipment and software and to suggest the length of time over which to depreciate the soft- ware and equipment if the company makes the purchase.

Required

Ignoring the effect of taxes, would you recommend the purchase or the lease? Why or why not? Referring to the definition of depreciation, what appropriate useful life should be used for the equipment and software?

Reference no: EM13953410

Questions Cloud

What are the title and special features for films : What are the title and special features for films rated PG-13 and longer than 180 minutes? What are the three most popular firstnames among the actors in the database?

Wholesalers and retailers account for cost of goods sold : Show that you understand how wholesalers and retailers account for cost of goods sold. The cost of goods sold represents goods sold, as opposed to the inventory purchased during the year. Cost of goods sold is matched with the sales of the period.

Retailers account for sales of merchandise : Explain how wholesalers and retailers account for sales of merchandise. Net sales represents sales less deductions for discounts and merchandise returned (returns and allowances) and is a key figure on the income statement.

Test for the independence between the disease and exposure : Find a 95% confidence interval for the odds ratio measuring the strength of the relationship between the disease and the exposure. Test for the independence between the disease and the exposure.

Determining the definition of depreciation : Ignoring the effect of taxes, would you recommend the purchase or the lease? Why or why not? Referring to the definition of depreciation, what appropriate useful life should be used for the equipment and software?

Ethics case studies for health information management : Select a case study from Ethics Case Studies for Health Information Management. Write a 700- to 950-word paper applying the following information: Summarize the situation, and identify any ethical dilemmas

Problem regarding the corrected balance sheet : Pete is the president of Island Enterprises. Island Enterprises began business at the beginning of the current year. The company's controller is out of the country on business.

Write a function to print first n number of fibonacci series : Write a recursive function to print first n number of Fibonacci series.

Costing system is based on normal costs : The company controller has asked all candidates to take a quiz to demonstrate their knowledge of job order costing. Chelsea’s job order costing system is based on normal costs, and overhead is applied based on direct labor cost.

User Account

All Pages