Question
20IC. h. Refer to table IC 3.2 and IC 3.4. Suppose D'Leon broke even in 2016 in the sense that sales revenues equaled total operating
20IC. h. Refer to table IC 3.2 and IC 3.4. Suppose D'Leon broke even in 2016 in the sense that sales revenues equaled total operating costs plus interest charges. Would the asset expansion have caused the company to experience a cash shortage that required it to raise external capital? Explain.
i.. If D'Leon starts depreciating fixed assets over 7 years rather than 10 years, would that affect (1) the physical stock of assets, (2) the balance sheet account for fixed assets, (3) the company's reported net income, and (4) the company's cash position? Assume that the same depreciation method is used for stockholder reporting and for tax calculations and that the accounting change has no effct on assets' physical lives.
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