Jackie Houston is a new accountant for Seitzer Company. She is learning on the job from Bob
Question:
Bob is rechecking the numbers and says that he agrees with her computation. However, he says that the credit entry should be made directly to the Equipment account. He argues that while accumulated depreciation is taught in the classroom, "It is easier to ignore the contra account and just credit the equipment account directly for the annual depreciation. Besides, the balance sheet shows the same amount for total assets under both methods."
Required
1. How should depreciation be recorded? Do you support Jackie or Bob?
2. Evaluate the strengths and weaknesses of Bob's reasons for preferring his method.
3. Indicate whether the situation faced by Jackie is an ethical problem.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Fundamental Accounting Principles
ISBN: 978-0071051507
Volume I, 14th Canadian Edition
Authors: Larson Kermit, Tilly Jensen