The information in the following table comes from the 2020 financial statements of QuickBrush Company and SmileWhite
Question:
The information in the following table comes from the 2020 financial statements of QuickBrush Company and SmileWhite Corporation:
Determine which company has the higher quality of earnings by discussing each of the three notes.
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Notes to the 2020 Financial Statements Goodwill Property. plant, and equipment Accounts receivable QuickBrush The company amortizes goodwill over 20 years. 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 a bad- debt allowance of 2% of accounts receivable. SmileWhite The company amortizes goodwill over 5 years. The company uses an accelerated depreciation method over the economic lives of the assets, which range from 5 to 20 years for buildings. The company uses a bad- debt allowance of 5% of accounts receivable.
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Note 1 Goodwill QuickBrush amoritizes goodwill over 20 years while SmileWhite amoritizes goodwill over 5 years This means that QuickBrush recognizes g...View the full answer
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Related Book For
ISE Essentials Of Investments
ISBN: 9781265450090
12th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus
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