Select one of the following independent cases. Each student should select a different case. For the case you select, discuss whether you agree or disagree with the position taken by the company or individual. Use generally accepted accounting principles in defending your position.

Mr. Fogle, the president of a company that manufactures food processors asks:

Why is it that Im forced to record depreciation expense on my property when I could sell it for more than I originally paid? I thought that the purpose of the balance sheet is to reflect the value of my business and that the purpose of the income statement is to report the net change in value of a company. It doesnt make any sense to penalize my profits when the building hasnt lost any value.

Ms. Carter, president of a company that manufactures specialty food items, states:

We shall have no difficulty in paying for our new plant assets needed during the coming year because our estimated outlays for new equipment amount to only $80,000 and we have more than twice that amount in our accumulated depreciation account at present.

The policy of the Liebnitz Co. is to recondition its building and equipment each year so that they are maintained in perfect repair. Because of the extensive maintenance and repair costs incurred in 2012, the company president believes that depreciation expense should not be recorded for 2012.

Maxie Smith, a student who has had no accounting courses, is looking at the balance sheets of two companies in which he is thinking of investing. He remarks that both companies have the same amount of equipment.