Here are the most recent balance sheets for Country Kettles, Inc. Excluding accumulated depreciation, determine whether each
Question:
COUNTRY KETTLES, INC. Balance Sheet 2011 2012 Assets Cash Accounts receivable Inventories Property, plant, and equipment $ 45,815 105,413 89,716 249,086 (77194) (85,579) $404,451 48,180 100,155 83,600 225,992 Less: Accumulated depreciation Total assets Liabilities and Equity 380,733 $ 72,522 0,980 49,500 25,000 222,731 $380,733 50,396 9,840 45,000 30,000 269,215 $404,451 unts payable Accrued expenses Long-term debt Common stock Accumulated retained earnings Total liabilities and equity
Step by Step Answer:
Item SourceUse Amount Cash Source 2365 Accounts receivab...View the full answer
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.
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