At the last meeting of the executive committee of Kearins, Ltd., the controller was severely criticized by
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The vice-president was equally adamant about the periodic depreciation charges; however, she presented a different argument. She said, “Our maintenance people tell me that the level of maintenance is such that our plant and equipment will last virtually forever.’’ She further stated that charging depreciation on top of maintenance expenses is double-counting—it seems reasonable to charge either maintenance or depreciation but not both.
The time taken by other pressing matters did not permit the controller to answer; instead, you were asked to prepare a report to the executive committee to deal with the issues raised by the president and vice-president.
Required
As the controller’s assistant, prepare the required report.
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Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1259066511
14th Canadian Edition
Authors: Larson Kermit, Jensen Tilly
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