What is the effect of dixons proposed change

Reference no: EM13123314

Clean Air Anti-Pollution Company is suffering declining sales of its principal product, nonbiodegradable plastic cartons. The president, Dixon Nuber, instructs his controller, Gavin Wood, to lengthen asset lives to reduce depreciation expense. A processing line of automated plastic extruding equipment, purchased for $3.5 million in January 2011, was originally estimated to have a useful life of 8 years and a salvage value of $400,000. Depreciation has been recorded for 2 years on that basis. Dixon wants the estimated life changed to 12 years total and the straight-line method continued. Gavin is hesitant to make the change, believing it is unethical to increase net income in this manner. Dixon says, "Hey, the life is only an estimate, and I've heard that our competition uses a 12-year life on their production equipment."
Instructions

(a) Who are the stakeholders in this situation?

(b) Is the proposed change in asset life unethical, or is it simply a good business practice by an astute president?

Reference no: EM13123314

Questions Cloud

How much should the town report as property tax revenue : How much should the town report as property tax revenue in its General Fund statements for the year 2009?

What is the breakeven sales volume and dollars for each nut : The Nut House sells almonds, cashews, and pistachios. Pistachios outsell cashews by a margin of 2 to 1 cans. Almonds were half the sales of cashews in cans.

Find minimum sample size needed using a prior study : Find the minimum sample size needed, using a prior study that found that 19% of computers needed repairs or had problems by the time the product was three years old.

Discussing exponential function : Give an example of an exponential function. Find this exponential function's inverse, which will be a logarithmic function. Plot the graph of both the functions.

What is the effect of dixons proposed change : Is the proposed change in asset life unethical, or is it simply a good business practice by an astute president?

What are the concentrations of hso4- : What are the concentrations of HSO4-, SO42-, and H+ in a 0.27 M KHSO4 solution? (Hint: H2SO4 is a strong acid; Ka for HSO4- = 1.3 10-2.).

Solve heat equation problem : Heat Equation Problem, Find the solution u(x,t) of the heat equation: with initial data u(x,0) = x

Compute the net present value : Van Doren Corporation is considering producing a new product, Autodial marketing data indicate that the company will be able to sell 45,000 units per year at $30. Compute the net present value.

What is the temperature change : If 88 J of heat are added to a pure gold coin with a mass of 20 g, what is its temperature change? Specific heat capacity of gold is 0.128 J/g'C

User Account

All Pages