Question
The other use of funds for a company is long-lived assets. What is a long-lived asset? How does Best Buy account for long-lived assets and
The other use of funds for a company is long-lived assets. What is a long-lived asset? How does Best Buy account for long-lived assets and what would these be? The Statement of Cash Flows identifies a large number here.
How about the impact of taxes on the deprecation methods? Which one would lower the firm's tax liability, a straight-line or MACRS?
For a company using straight line, earnings will be higher (less depreciation). As for book value (or equity), it will be higher under a straight line method. As for depreciable life, a shorter life will cause a lower book value. Why would a shorter depreciable life impact book value?
Depreciation expense is calculated differently for tax purposes than for book purposes, which tends to lead to deferred tax liabilities. US GAAP allows the uses of both the straight-line and the double-declining depreciation methods. Let's assume we just establish a new manufacturing firm, what methods you think we can chose the straight-line or the double-declining depreciation methods.
Is it necessary for a firm to use the same method of calculating depreciation expenses for financial statements purposes?
what the firm can do to increase its A/R and I/T turnovers ratios?
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