Describe the effect of each of the following: a. Depreciation is changed from the straight-line method to
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Describe the effect of each of the following: a. Depreciation is changed from the straight-line method to an accelerated method. b. Depreciation is changed from an accelerated method to the straight-line method. c. Income on construction contracts that had been reported on a completed-contract basis is now reported on the percentage-of- completion basis. d. The valuation of inventories is changed from a FIFO to a LIFO basis. e. It is determined that warranty expenses in prior years should have been 5% of sales instead of 4%. f. The valuation of inventories is changed from a LIFO to a FIFO basis. g. Your accounts receivable clerk has learned that a major customer has declared bankruptcy. h. Your patent lawyer informs you that your rival has perfected and patented a new invention making your product obsolete.
Accounts Receivable Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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a The existing depreciable book value is depreciated over the remaining useful life using the new ac...View the full answer
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In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue