Answer the following:

Make a short memo

Financial statement versus tax depreciation The following is an excerpt from a conversation between two employees of WXT Technologies, Nolan Sears and Stacy Mays. Nolan is the accounts payable clerk, and Stacy is the cashier. Nolan: Stacy, could I get your opinion on something ?. Stacy: Sure, Nolan. Nolan: Do you know Rita, the fixed assets clerk? Stacy: I know who she is, but I don't know her very well. Why? Nolan: Well, I was talking to her at lunch last Monday about how she liked her job. You know, the usual; and she mentioned something about having to keep two sets of books-one for taxes and one for the financial That can't be good accounting, can it? What do you think? Stacy: Two sets of books? It doesn't sound right. Nolan: It doesn't seem right to me either was always taught that you had to use generally accepted accounting principles. How can there be two sets of books? What can be the difference between the two? How would you respond to Nolan and Stacy if you were Rita? Improvements and repairs Miss U PH owns three delivery trucks. Details for each truck at the end of the most recent year follow: Expected Accumulated Age Useful Life Initial Cost Depreciation Truck 1 3 6 $22,500 $11.250 Truck 2 5 26,250 21,875 Truck 3 2 281500 9,500 At the beginning of the year, a hydraulic lift is added to Truck 1 at a cost of $4,500. The addition of the hydraulic lift will allow the company to deliver much larger objects than could previously be delivered. At the beginning of the year, the engine of Truck 2 is overhauled at a cost of $5,000. The engine overhaul will extend the truck's useful life by three years. Write a short memo to Miss U's chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2