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Cannon Bly is a sales manager for an automobile dealership. He earns a bonus each year based on revenue from the number of autos sold in the year less related warranty expenses. Actual warranty expenses have varied over the prior 10 years from a low of 3% of an automobile's selling price to a high of 10%. In the past, Bly has tended to estimate warranty expenses on the high end to be conservative. He must work with the dealership's accountant at year-end to arrive at the warranty expense accrual for cars sold each year.
1. Does the warranty accrual decision create any ethical dilemma for Bly?
2. Since warranty expenses vary, what percent do you think Bly should choose for the current year? Justify your response.
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Debits to the accumulated depreciation accounts are made whenever depreciable plant assets are sold or retired. Thus, the book value of plant assets sold or retired during the year was $40,000
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maroon corporation expects employees income tax rates to decrease subsequently year. the employees use the cash method.
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What discount rate did you use to evaluate the investment alternatives offered by the proposed capital expansion and replacement program?
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