What is the effect of dixons proposed change on income

Assignment Help Cost Accounting
Reference no: EM13532073

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?

(c) What is the effect of Dixon"s proposed change on income before taxes in the year of change?

Reference no: EM13532073

Questions Cloud

Define the term absorption. : Define the term absorption. Explain the importance of the surface area to volume ratio as afactor limiting cell size
Compute the percent by mass of sugar : You have a 10.40-g mixture of table sugar (C 12 H 22 O 11) and table salt (NaCl). When this mixture is dissolved in 150. g of water, the freezing point is found to be-2.24C. Calculate the percent by mass of sugar in the original mixture.
The cell membrane is made of phospholipids : The cell membrane is made of phospholipids. What unique propertiesof phospholipids and what unique properties of our world make thismolecule uniquely adept at forming cellmembranes?
Find the volume of methane measure : The heat of combustion of CH4 is 890.4 kJ/mol and the heat capacity of H2O is 75.2 J/mol×K. Find the volume of methane measured at 298 K and 0.790atm required to convert 1.33L of water at 298 K to water vapor at 373 K.
What is the effect of dixons proposed change on income : Who are the stakeholders in this situation and what is the effect of Dixon"s proposed change on income before taxes in the year of change?
Find the minimum average power output of the engine : As the driver steps on the gas pedal, a car of mass 1 180 kg accelerates from rest. What is the minimum average power output of the engine over this time interval
The life cycle of the common mushroom is a process : The life cycle of the common mushroom is a process in which diploidnuclei exist for only a brief period. They are then quickly reducedby meiosis to a haploid state before the life cycle continues. Whatdoes this brief period as a diploid organism a..
Evaluate the percentage of each conformer at equilibrium : The energy difference of 3.8 kj/mol between gauche and anti butane corresponds to an equilibrium constant k of approximately 1.9. Calculate the percentage of each conformer at equilibrium
What is the resonant angular frequency : Consider an LC circuit in which the inductance is 345 mH and the capacitance is 0.13 muF. What is the resonant angular frequency

Reviews

Write a Review

Cost Accounting Questions & Answers

  Cost accounting assignment

Evaluate Method of measuring costs associated with production, budgeting process, normal job-order costing system , master budget, cycle time.

  Prepare the journal entries

Prepare the journal entries to record the bond issue and interest expense.

  Advise as to the liability of all the parties

Write a report on given case study and Advise as to the liability of ALL the parties both under common law and the Corporations Law.

  Prepare revenues budget

Prepare Revenues budget and Production budget in units

  Effect of exchange rate changes on cash and cash

Effect of exchange rate changes on cash and cash

  Corporate governance

You are to reflect on how this case of China Sky relates to what the arguments for and against allowing audit firm partners and/or employees to join audit committees.

  Cost-benefit analysis

A cost-benefit analysis of electronic medical records in primary care

  Non-annual interest rates and annuities

Theory of Interest- Non-annual interest rates and annuities

  Job costing in service organizations

How is job costing in service organizations different from job costing in manufacturing environments?

  Accounting for bad debt expense

Accounting for bad debt expense

  Accounting and partnership problems

Accounting and Partnership problems

  Development of relevant cash flows

Development of relevant cash flows - Cost estimating and financial analysis

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd