The information in the following table comes from the 2007 financial statements of QuickBrush Company and SmileWhite

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The information in the following table comes from the 2007 financial statements of QuickBrush Company and SmileWhite Corporation:

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www.mhhe.com/bkm 14 Financial Statement Analysis 465 NOTES TO THE 2007 FINANCIAL STATEMENTS QuickBrush SmileWhite Goodwill The company amortizes goodwill over 20 years.

The company amortizes goodwill over 5 years.

Property, plant, and equipment The company uses a straight-line depreciation method over the economic lives of the assets, which range from 5 to 20 years for buildings.

The company uses an accelerated depreciation method over the economic lives of the assets, which range from 5 to 20 years for buildings.

Accounts receivable The company uses a bad debt allowance of 2% of accounts receivable.

The company uses a bad debt allowance of 5% of accounts receivable.

Determine which company has the higher quality of earnings by discussing each of the three notes. LO.1

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