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Floors 4 U uses straight-line depreciation for its equipment. The company purchased equipment for $250,000 and estimated its useful life at 8 years. The bookkeeper
Floors 4 U uses straight-line depreciation for its equipment. The company purchased equipment for $250,000 and estimated its useful life at 8 years. The bookkeeper failed to consider the residual value of $25,000. What is the impact on net income and operating income of failing to consider the residual value? a. Net income will be overstated, while operating income will be understated. b. Net income will be understated, while operating income will be overstated. c. Both net income and operating income will be understated. d. Both net income and operating income will be overstated
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