(a) Concept introduction: Straight Line Method : This method of depreciation gives an equal depreciation charge throughout the life of asset. Accelerated Depreciation: This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset. The effect of depreciation policy on getting higher net profit and lower current ratio .

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Answer 1

Question

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

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Students have asked these similar questions

Required: (a) You are required to calculate the following ratios:(i) Gross profit margin(ii) Operating profit margin(iii) Expenses to sales(iv) Return on Capital Employed(v) Asset turnover(vi) Non-current asset turnover(vii) Current Ratio(viii) Quick Ratio(ix) Inventory days(x) Receivables days(xi) Payable days(xii) Interest cover (b) In light of your calculations comment on the performance of the company over thelast two years.

Indicate the effect of the transactions listed in the following table on total current assets, current ration, and net income. Use (+) to indicate an increase, (-) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any necessary assumptions and assume an initial current ratio of more than 1.0. A fixed asset is sold for less than book value.

Which of the following requires an adjustment to the opening balance of retained earnings in the earliest period of the comparative financial statements presented? A change in the estimated useful life of machinery. A change in the expected residual value of a property. A change from straight line to declining balance depreciation. A change from first-in, first out (FIFO) to weighted average inventory cost flow assumption

Answer 2

Question

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Answer 6

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

Answer 7

Chapter 13, Problem 14ME

To determine

(a)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

Accelerated Depreciation:

This method of computing depreciation gives the amount of depreciation as higher in the inital years and then gets lower by the end of the life of asset.

The effect of depreciation policy on getting higher net profit and lower current ratio.

Answer 8

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

Answer 9

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later is added in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier is added in the closing inventory.

To compute:

The effect of inventory policy on getting higher net profit and lower current ratio.

Answer 10

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Answer 11

To determine

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 13 - Prob. 1Q Ch. 13 - Prob. 2Q Ch. 13 - What is ratio analysis? Why is it useful? Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5Q Ch. 13 - Why are some analyses called horizontal and others...Ch. 13 - Slow Cellar’s current ratio increased from 1.2 to...Ch. 13 - From last year to this year. Colossal Company’s...Ch. 13 - From last year to this year, Berry Barn reported...Ch. 13 - Prob. 10Q

Solution Summary: The author introduces the FIFO and LIFO methods of depreciation.

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(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Want to see the full answer?

Chapter 13 Solutions

Solution Summary: The author introduces the FIFO and LIFO methods of depreciation.

Videos

(c) Concept introduction: Straight Line Method: This method of depreciation gives an equal depreciation charge throughout the life of asset. The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.

Want to see the full answer?

Chapter 13 Solutions

(c)

Concept introduction:

Straight Line Method:

This method of depreciation gives an equal depreciation charge throughout the life of asset.

The effect of depreciation policy with different useful life on getting higher net profit and lower current ratio.