critical thinking

Anonymous
timer Asked: Mar 11th, 2016

Question description

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. However, your supervisor has just paid you a visit. She told you that the controller is concerned that profits for the last fiscal year are much less than profits in 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.

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: (1) repairs and maintenance and (2) 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?


Tutor Answer

(Top Tutor) Studypool Tutor
School: UCLA
Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

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