Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Flounder Company and Novak Company are two companies that are similar in many respects. One difference is that Flounder Company uses the straight-line method and

Flounder Company and Novak Company are two companies that are similar in many respects. One difference is that Flounder Company uses the straight-line method and Novak Company uses the declining-balance method at double the straight-line rate. On January 2, 2020, both companies acquired the depreciable assets shown below. Asset Buildings Equipment Cost $320,000 140,000 Flounder Company Novak Company 2020 Salvage Value $30,000 $82,500 70,000 4,000 Including the appropriate depreciation charges, annual net income for the companies in the years 2020, 2021, and 2022 and total income for the 3 years were as follows. 2021 $86,900 Useful Life 78,000 40 years 10 years 2022 $88,500 87,000 Total $257,900 235,000 At December 31, 2022, the balance sheets of the two companies are similar except that Novak Company has more cash than Flounder Company, and net property, plant, and equipment are different. Lynda Peace is interested in buying one of the companies. She comes to you for advice.
image text in transcribed
image text in transcribed
Flounder Company and Novak Company are two companies that are similar in many respects. One difference is that Flounder Company uses the straight-line method and Novak Company uses the declining-balance method at double the straight-line rate, On January 2, 2020, both companies acquired the depreciable assets shown below. Including the appropriate depreciation charges, annual net income for the companies in the years 2020, 2021, and 2022 and total income for the 3 years were as follows. At December 31, 2022, the balance sheets of the two companies are similar except that Novak Company has more cash than Flounder Company, and net property, plant, and equipment are different. Lynda Peace is interested in buying one of the companases. She comes to you for advice. Determine the annual depreciation recorded by each company during the 3 years. Determine the total accumulated depreciation recorded by each company during the 3 years

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Basics Of IT Audit Purposes Processes And Practical Information

Authors: Stephen D. Gantz

1st Edition

0124171591, 978-0124171596

More Books

Students also viewed these Accounting questions

Question

What is earnings management?

Answered: 1 week ago

Question

1. Send a brief note thanking the family members for attending.

Answered: 1 week ago