Prepare an income statement for 2004

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Reference no: EM131340913

1. Ignoring the effect of income taxes, prepare an income statement for 2004 and a balance sheet as at 1 January 2004 and 31 December 2004 assuming that:
(i) ABC expenses EUR 1,000 in construction costs

(ii) ABC capitalises these costs.

Assume that construction costs will be depreciated over four years and that the resulting asset was ready for use on the 1st of July 2004.

2. Show the effects of decisions (i) and (ii) on shareholders' equity, profit before tax, pretax operating and investing cash flows, and on key financial ratios.

3. Summarise the results of decision (i) and decision (ii).

Reference no: EM131340913

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