Analyzing disclosures regarding fixed assets

Assignment Help Accounting Basics
Reference no: EM131110892

ANALYZING DISCLOSURES REGARDING FIXED ASSETS. Exhibit 7.29 presents selected financial statement data for three chemical companies: Monsanto Company, Olin Corporation, and NewMarket Corporation. (NewMarket was formed from a merger of Ethyl Corporation and Afton Chemical Corporation.)

Required

a. Compute the average total depreciable life of assets in use for each firm.

b. Compute the average age to date of depreciable assets in use for each firm at the end of the year.

NewMarket

Monsanto

Olin

Corporation

Company

Corporation

Depreciable Assets at Cost:

Beginning of year

$752

$4,611

$1,796

End of year

777

4,604

1,826

Accumulated Depreciation:




Beginning of year

584

2,331

1,301

End of year

611

2,517

1,348

Net Income

33

267

55

Depreciation expense

27

328

72

Deferred tax liability relating




to depreciable assets:




Beginning of year

13

267

83

End of year

9

256

96

Income tax rate

35%

35%

35%

Depreciation method for




financial reporting

Straight-Line

Straight-Line

Straight-Line

Depreciation method for




tax reporting

Accelerated

Accelerated

Accelerated

c. Compute the amount of depreciation expense recognized for tax purposes for each firm for the year using the amount of the deferred taxes liability related to depre- ciation timing differences.

d. Compute the amount of net income for the year for each firm assuming that depre- ciation expense for financial reporting equals the amount computed in Part c for tax reporting.

e. Compute the amount each company would report for property, plant, and equipment (net) at the end of the year if it had used accelerated (tax reporting) depreciation instead of straight-line depreciation.

f. What factors might explain the difference in average total life of the assets of NewMarket Corporation and Olin Corporation relative to the assets of Monsanto Company?

g. What factors might explain the older average age for depreciable assets of NewMarket Corporation and Olin Corporation relative to Monsanto Company?

Reference no: EM131110892

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Imitability of a resource can occur through

1. The influence of globalization in managing strategically can be demonstrated in:

  Maintaining a cash balance

You are the assistant accountant at Krispics Co. Ltd, a distributor of snack foods. Krispies has a large loan from a bank, and part of the loan agreement stipulates that the company must maintain a Cash at Bank account balance of at least S75 000,..

  Wesley hospital installs a new parking lot the paving cost

wesley hospital installs a new parking lot. the paving cost 40000 and the lights to illuminate the new parking area

  Deductible mileage for workday

Amy works as an auditor for a large major CPA firm. During the months of September thru and November of each year, she is permanently assigned to the team auditing Garnet Corporation. As a result, every day she drives from her home to Garnet and r..

  Determine the amount of write-down reversal required using

at december 31 2012 mnc still has the same three products in its inventory. updated information for each product

  Why do companies offer stock options what is the experience

why do companies offer stock options? what is the experience of either your organization or an organization that you

  One of the 2 questions i am having problem with the height

one of the 2 questions i am having problem with. the height in feet of a football as a function of time in seconds is

  Bob burgie company produces one product a putter called

bob burgie company produces one product a putter called go-putter. burgie uses a standard cost system and determines

  The principal amount of the lease obligation

On January 1, 2015, Day Corp. entered into a 10-year lease agreement with Ward, Inc. for industrial equipment. Annual lease payments of $10,000 are payable at the end of each year. Day knows that the lessor expects a 10 percent return on the l..

  Determine the total sales the total cost of merchandise

the beginning inventory of merchandise at keats office supplies and data on purchases and sales for a three-month

  During february 400 units in process on february 1 were

homestyle soup co. uses a process cost system to record the costs of processing soup which requires the cooking and

  Determine if the irr for system a

Based on the result of 3) which is the better investment? Determine if the IRR for System A is higher than 15%.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd