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Ford Motor Company Data for the year ended December 31, 2023: Item Amount Property, Plant, and Equipment (PPE) Cost $12,000,000 Accumulated Depreciation $5,000,000 Estimated Salvage
Ford Motor Company Data for the year ended December 31, 2023:
Item | Amount |
Property, Plant, and Equipment (PPE) Cost | $12,000,000 |
Accumulated Depreciation | $5,000,000 |
Estimated Salvage Value | $2,000,000 |
Remaining Useful Life | 7 years |
Annual Depreciation Expense | $1,000,000 |
- Calculate the book value of PPE.
- Determine the new depreciation expense if the estimated useful life is reduced to 6 years.
- Discuss the financial statement impact of this change in estimate.
- Explain the significance of the Conservatism Principle in depreciation.
- How should the company record the change in depreciation expense?
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