Estimating the useful lives of plant assets

Assignment Help Accounting Basics

Reference no: EM13150466

Mickey Gillespie is the controller of Print Technologies, a publicly owned company. The company is experiencing financial difficulties and is aggressively looking for ways to cut costs. Suzanne Bedell, the CEO, instructs Gillespie to lengthen from 5 to 10 years the useful life used in computing depreciation on certain special- purpose machinery. Bedell believes that this change represents a substantial cost savings, as it will reduce the depreciation expense on these assets by nearly one- half. Note: The proposed change affects only the depreciation expense recognized in financial state-ments. Depreciation deductions in income tax returns will not be affected.

Instructions

a. Discuss the extent to which Bedell's idea will, in fact, achieve a cost savings. Consider the effects on both net income and cash flows.

b. Who is responsible for estimating the useful lives of plant assets?

c. Discuss any ethical issues that Gillespie should consider with respect to Bedell's instructions.

Reference no: EM13150466

Questions Cloud

Cost assigned to ending inventory : Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d ) LIFO. (Do not round interim calculations. Round per unit costs to three decimals. Round your answ..

General and adjusting journal enries-t-accounts : Prepare the following using any required worksheets, general and or adjusting journal enries, T-accounts, and trial balance per pg 212 style.

How many grams of oxygen are collected in a reaction : How many grams of oxygen are collected in a reaction where 265mL of oxygen gas is collected over water at a temperature of 25 degrees celcius and a total pressure of 696 torr

Amount allocated to cost of goods sold : Using the FIFO inventory method, the amount allocated to COST OF GOODS SOLD for July is ??

Estimating the useful lives of plant assets : Discuss the extent to which Bedell's idea will, in fact, achieve a cost savings. Consider the effects on both net income and cash flows. Who is responsible for estimating the useful lives of plant assets? Discuss any ethical issues that Gillespie s..

Relation-correlation coefficient-coefficient determination : Calculate the correlation coefficient, coefficient of determination. Check whether there is a relation between correlation coefficient and coefficient of determination.

What role do they play in ecology : Write a 700- to 1,050-word paper explaining the important aspects of the study and how they relate to ecology and evolution.

What was the temperature on the previous day : a cylinder of compressed gas has a pressure of 4.882 atm on one day. the next day the same cylinder of gas has a pressure of 4.690 atm, and its temperature is 8 degrees celcius. what was the temperature on the previous day?

Methods available to allocate the four costs : You have been called on in your function as accounting manager to resolve the dispute. In your report you should explain the different methods available to allocate the four costs to the product cost.

User Account

All Pages