You are in a meeting with Andrea Schwager, the new CEO of your company, discussing property, plant, and equipment, when she asks the following: “The accountants are telling me that, if we sell a piece of equipment for an amount in excess of its carrying amount on our statement of financial position, then we record a ‘gain,’ which increases net income. If it increases net income, then why don’t we call it a ‘revenue’? Wouldn’t this be more understandable for financial statement users?” Answer Andrea Schwager’s questions.
Answer to relevant QuestionsDuring a discussion regarding the recent sale of a piece of equipment, your company president, Nanda Saloojee, stated: “I don’t understand what it means to ‘have a gain from the sale of equipment.’ Why do we call it ...Metro Inc. owns and operates a network of 566 supermarkets and pharmacies in Quebec and Ontario under the Metro, MetroPlus, Super C, Food Basics, Adonis, Brunet, and Pharmacy and Drug Basics banners. Exhibit 8-19 shows ...Conservative Company purchased a warehouse on January 1, 2011, for $400,000. At the time of purchase, Conservative anticipated that the warehouse would be used to facilitate the expansion of its product lines. The warehouse ...Explain what is meant by the term working capital loan. Is this considered to be a secured borrowing? Explain why an employer’s wage expense will be more than the gross wages earned by its employees.
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