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At the beginning of 2011, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a 10-year service life and no residual value. The straight-line depreciation method was used to measure depreciation for 2011 and 2012. Late in 2013, it became apparent that sales of the new frozen food line were significantly below expectations. The company decided to continue production for two more years (2014 and 2015) and then discontinue the line. At that time, the equipment will be sold for minimal scrap values. The controller, Heather Meyer, was asked by Harvey Dent, the company's chief executive officer (CEO), to determine the appropriate treatment of the change in service life of the equipment. Heather determined that there has been an impairment of value requiring an immediate write-down of the equipment of $12,900,000. The remaining book value would then be depreciated over the equipment's revised service life. The CEO does not like Heather's conclusion because of the effect it would have on 2013 income. “Looks like a simple revision in service life from 10 years to 5 years to me,” Dent concluded. “Let's go with it that way, Heather.” What is the difference in before-tax income between the CEO's and Heather's treatment of the situation? Discuss Heather Meyer's ethical dilemma. Do you agree with the ethical perspectives of your classmates? What implications could this have on future Healthy Life Food Company dealings?
Compute for the proposed capital investment the Payback period under the assumption that cash inflows occur evenly throughout the year.
Mr. Morad, who is in the 25% tax bracket, is the sole shareholder of Shiraz bakery, Shiraz’s average annual net profit from business (before deduction of Morad’s salary) is $135,000. Compute the income tax burden on this profit, ignoring any payroll ..
Prepare a statement of owners equity for April - The statement of owner's equity for a proprietorship is similar to the retained earnings statement for a corporation.
Direct Materials Used, Cost of Goods Manufactured In March, Chilton Company purchased materials costing $25,000 and incurred direct labor cost of $10,000. Overhead totaled $42,000 for the month. What was the cost of direct materials used in March? Wh..
the case scenario provided will be used to answer the discussion questions that follow.ms. g. a 23-year-old diabetic is
Would Southern Aircraft record the lease as an operating or capital lease? Why? Provide the journal entry to record the acquisition.
Prepare the journal entry(ies) at the date of purchase. Prepare an amortization schedule for the installment agreement.
Selling prices and variable costs per unit are shown below. Based on this information, illustrate what is the Mad Hatter's most profitable sales mix?
The income tax rate is 30% for all years. what is the income tax expense, the deferred tax asset to be recognized and the deferred tax liability-current to be recognized?
ACC5202 Assignment. Calculate the value of the machine for depreciation purposes. Explain your reasons for including or excluding certain items in the calculation
Articulation of financial statements.
Prepare comparative (side-by-side) balance sheets and income statements for the first month of BIKE Company for each of the following three alternatives, Revenue is recognized at the time of shipment.
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