Bombardier Inc. is one of the largest manufacturers of planes and trains in the world. The companys
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1. For years 1 and 2 only, prepare a separate depreciation schedule for each of the following alternative methods. Round your computations to the nearest dollar.
a. Straight- line
b. Units- of- production
c. Double- declining- balance
2. Evaluate each method in terms of its effect on cash flow, fixed asset turnover ratio, and earnings per share ( EPS). Assuming that Bombardier is most interested in reducing taxes and maintaining a high EPS for year 1, which method of depreciation would you recommend to management? Would your recommendation change for year 2? Why or why not?
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
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Related Book For
Financial Accounting
ISBN: 978-1259103285
5th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
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