Question: A manager in a company reporting under U.S. GAAP complained about the amount of depreciation charged on the plant for which she was responsible: The

A manager in a company reporting under U.S. GAAP complained about the amount of depreciation charged on the plant for which she was responsible: “The market value of my plant just continues to increase, yet I am hit with large depreciation charges on my income statement and the value of my plant and equipment on the balance sheet goes down each year. This doesn’t seem fair.” Comment on this statement, focusing on the relation of asset values on the balance sheet to market values of the assets.

Step by Step Solution

★★★★★

3.49 Rating (179 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The manager has a point However under US GAAP the historical cost of longlived assets is alloc... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

414-B-A-I-A (4810).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

A manager complained about the amount of depreciation charged on the plant for which she was responsible: The market value of my plant just continues to increase, yet I am hit with large depreciation...

A large accounting firm is concerned about the amount of time its managers spend dealing with email. A random sample of 27 managers taken in the past revealed that they spent, on average, 49.2...

A major bank is concerned about the amount of debt being accrued by customers using its credit cards. The Board of Directors voted to institute an expensive monitoring system if the mean for all of...

24 Production Facilities and Depreciation A manager in a company reporting under U.S. GAAP complained about the amount of depreciation charged on the plant for which she was responsible: The market...

Production Facilities and Depreciation A manager complained about the amount of depreciation charged on the plant for which she was responsible: "The market value of my plant just continues to...

1.Imperial Foods checkbook balance on December 31, Year 1 was $122,400. In addition, Imperial held the following items in its safe on December 31: (1) A check for $600 from Brewster, Inc., received...

Impairment under GAAP and IFRS. IFRS isn't going to be on my final so I feel no need to learn it, I just need a good grade on the assignment. Grana Enterprise Inc. Grana Enterprise Inc. (GEI) is a...

Impairment under GAAP and IFRS. Price and Deadline non negotiable Grana Enterprise Inc. Grana Enterprise Inc. (GEI) is a manufacturing company with operations in Italy and Serbia. GEI in Italy: In...

Using the SEC 10-K for LOCKHEED MARTIN answer the questions below: ****I included the report in the attachment **** What were total current assets for the two most recent years? What were total...

What is the difference in meaning between the terms genetic recombination and crossing over?

Does the fact that the board did not formally meet to discuss the loan or the draw down mean that the members acted improperly?

10. Challenge: Show how to set the screen background color in video mode 13h to white.

23. In assessing the financial return from a production system, it is important to work out the: (a) marginal net return. (b) average net return. (c) cost of production.

The secretary of the Woodland Hockey Club gives you the following summary of his cashbook for the year ended 31 May 20X1: The secretary also gives you the following information: On 31 May 20W9 the...

The treasurer of the Senior Social Club has prepared the following summary of the clubs receipts and payments for the year ended 30 November 20X9. On 1 December 20X8 the club owned equipment that had...

The Elite Bowling and Social Club prepares its annual financial statements to 31 October. The following receipts and payments account has been prepared by the treasurer: Additional information 1. The...

Problem 2-10 Cash Flow to Stockholders [LO 4] The December 31, 2021, balance sheet of Chen, Incorporated, showed $139,000 in the common stock account and $2,640,000 in the additional paidin surplus...

A production company not so long ago paid a dividend of $2.50 per share and plans to increase its dividends by 10% in the first year, 15% in year 2, 20% in year 3 then at a constant rate of 5%...

Time Value Of Money - Present Value of Growing Annuity Hi, Could You Apply This Formula: Present Value of Growing Annuity = Cashflow / Interest Rate Growth Rate [ 1-(1+Growth Rate /1+ Interest...