Reference no: EM13866095
May Manufacturing Company was organized January 2, 2010. During 2010, it has used in its reports to management the straight line method of depreciating its plant assets.
On November 9, you are having a conference with May's officers to discuss the depreciation method to be used for income tax and stockholder reporting. The president of May has suggested the use of a new method, which he feels is more suitable than the straight-line method for the needs of the company during the period of rapid expansion of production and capacity that he foresees. The following is a schedule in which the proposed method is applied to a fixed asset with an original cost of $32,000, an estimated useful life of five years, and a scrap value of approximately $2,000.
.png)
The president favors the new method because he has heard that:1. It will increase the funds recovered during the years near the end of the asset's useful life when maintenance and replacement disbursements are high.2. It will result in increased write-offs in later years, thereby reducing taxes.
Required1. Explain the purpose and, hence, the nature of accounting for depreciation.2. Is the president's proposal within the scope of generally accepted accounting principles? In making your decision, explain the circumstances, if any, under which the method would be reasonable and those, if any, under which it would not be reasonable.3. The president wants your advice.a. Explain whether depreciation recovers or creates funds.b. Assume that the Internal Revenue Service accepts the proposed depreciation method in this particular case. If the proposed method were used for stockholder and tax reporting purposes, explain how it would affect the availability of funds generated byoperations.
|
What major factors are driving the internationalization
: Write a 2- to 4-page paper (500-1000 words) addressing the following: What major factors are driving the internationalization of business? List and describe the major challenges to the development of global systems. Explain why some firms have not pl..
|
|
Write a subroutine that takes one temperature in celsius
: Write a subroutine that takes three arguments, X, Y, and Z. It then computes X.Y.Z and returns it - Write a subroutine that takes one temperature in Celsius and convert it to Fahrenheit using the approximate formula f = c.2 + 32.
|
|
Now use excel to do a regression of the inflation rate
: Now use Excel to do a regression of the inflation rate (X) on the percent changes in stock market indices (Y). Include the data from all eighteen countries, including Japan. Use a significance of .05. Interpret your results (R-square, regression coef..
|
|
A greater comfort level with respect to the conformity
: As a user of the financial statements in each instance does one expression more than the other give you a greater comfort level with respect to the conformity of the financial statements with generally accepted accounting principles? Why or why not?
|
|
The president of may has suggested the use of a new method,
: May Manufacturing Company was organized January 2, 2010. During 2010, it has used in its reports to management the straight line method of depreciating its plant assets.
|
|
What is the nfl media groups general strategic direction
: What is the NFL Media group's general strategic direction? What are the key drivers of its success to date? What, in your view, is the preferred way of managing digital operations for a sports league - and of managing traditional vs. new media cha..
|
|
What step(s) might the auditor take at this point?
: If the auditor discovers that the audit committee routinely ignores such communications especially when they are critical of management use of GAAP in the financial statements, what step(s) might the auditor take at this point.
|
|
The legal regulations of conducting business overseas
: The legal regulations of conducting business overseas
|
|
What would you do if you were arty?
: Moreover, the firm has never had any accounting issues with respect to the client Assume the firm decides it is not necessary to do the additional testing What would you do if you were Arty? Consider in your answer the ethics of the situation and rep..
|