Pinson Company and Estes Company are two proprietorships that are similar in many respects. One difference is
Question:
Including the appropriate depreciation charges, annual net income for the companies in the years 2012, 2013, and 2014 and total income for the 3 years were as follows.
At December 31, 2014, the balance sheets of the two companies are similar except that Estes Company has more cash than Pinson Company.
Lynda Peace is interested in buying one of the companies. She comes to you for advice.
Instructions
With the class divided into groups, answer the following.
(a) Determine the annual and total depreciation recorded by each company during the 3 years.
(b) Assuming that Estes Company also uses the straight-line method of depreciation instead of the declining-balance method as in (a), prepare comparative income data for the 3 years.
(c) Which company should Lynda Peace buy?Why?
Step by Step Answer:
Accounting Principles
ISBN: 9781118566671
11th Edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso