Givens Company and Runge Company are two companies that are similar in many respects. One difference is
Question:
Including the appropriate depreciation charges, annual net income for the companies in the years 2012, 2013, and 2014 and total income for the 3 years were as follows.
At December 31, 2014, the balance sheets of the two companies are similar except that Runge Company has more cash than Givens Company.
Linda Yanik is interested in buying one of the companies. She comes to you for advice.
Instructions
With the class divided into groups, answer the following.
(a) Determine the annual and total depreciation recorded by each company during the 3 years.
(b) Assuming that Runge Company also uses the straight-line method of depreciation instead of the declining-balance method as in (a), prepare comparative income data for the 3 years.
(c) Which company should Linda Yanik buy?Why?
Step by Step Answer:
Financial and managerial accounting
ISBN: 978-1118016114
1st edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso