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How much net income decrease as result of fox depreciation

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Reference no: EM132955962

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(1) Owl Co. completed an internal audit of its bookkeeping system that uncovered an error on December 31, before the books were closed. A three-year insurance policy for $180,000 acquired on August 1 of the current year was recorded by debiting insurance expense. Owl's 12/31 entry to correct the initial entry will include which of these:

A. Credit Insurance Expense for $155,000

B. Credit Prepaid Insurance for $155,000

C. Debit Prepaid Insurance for $25,000

D. Debit Insurance Expense for $25,000

(2) Fox, Inc. has one plant asset with an original cost of $940,000, a $60,000 expected residual value, and a 25-year estimated useful life. At the beginning of 2020, following 15 full years of ?depreciation, Fox determined that the asset will only be useful for another 4 years and decreased the expected residual value to $50,000. This change is needed to reflect advanced technology used in newer equipment currently available on the market. Fox uses only? straight-line depreciation. How much will net income decrease as a result of Fox's depreciation entry for 2020?

a. $75,500

b. $222,500

c. $81,500

d. $90,500

Reference no: EM132955962

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