Using the data from E7-4, indicate the effects on the liquidity metric free cash flow and profitability
Question:
Using the data from E7-4, indicate the effects on the liquidity metric free cash flow and profitability metric asset turnover for each of the following:
1. The equipment was sold in the first week of the fourth year for $23,300.
2. The equipment was sold in the first week of the fourth year for $15,250 instead of $23,300.
3. The equipment was sold at the end of four years for its estimated residual value of $10,000.
4. The equipment was discarded at the end of its useful life with no residual value. The balance of the equipment and its related accumulated depreciation is $140,000.
E7-4
Custer Construction Co. reported $8,300,000 for equipment and $4,950,000 for accumulated depreciation—equipment on its balance sheet.
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