Need help with Financial Accounting Critical Thinking

Dec 20th, 2015
Anonymous
Category:
Accounting
Price: $20 USD

Question description

Option #2: Financial Statement Research

You have just landed an accounting position with a national telecommunications company. Because this is your first job you are eager to please your co-workers and your supervisor, who works closely with the controller. Your supervisor has just paid you a visit, and she told you that the controller is concerned that profits for the last fiscal year are much less than profits for the preceding five years. The controller has asked that depreciation on a machine purchased at the beginning of last year be recalculated. The machine has a five-year useful life and is depreciated using the straight-line method. The controller has asked that the machine be depreciated over a ten-year useful life. Your supervisor contends that the “depreciation thing” really doesn’t matter because the machine has already been paid for. In addition, your supervisor gives you an adjusting journal entry to correct what she calls “expense transfers.” This entry transfers items originally recorded as repairs and maintenance to capital assets. 

Address the following:

  1. Do you agree with the supervisor regarding the change in the estimated useful life of the machine? Why or why not?
  2. Are you going to recalculate the depreciation and change the entry? Why or why not?
  3. What is the proper accounting treatment for: (a) repairs and maintenance and 
    (b) plant assets?
  4. What is your supervisor trying to accomplish with the suggested “expense transfers” entry? What would be your course of action regarding the suggested entry?

Your response should include 2-3 pages of written text in addition to any calculations and solutions you offer to support your thinking. 


Tutor Answer

(Top Tutor) Studypool Tutor
School: University of Virginia

Studypool has helped 1,244,100 students

Review from student
Studypool Student
" Thanks, good work "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1823 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors