Salvage Value Was Ignored When Originally Calculating the Units-Of-Production Depreciation

question 145

Multiple Choice

Salvage value was ignored when originally calculating the units-of-production depreciation.This error would cause:

• A)the period's net income to be overstated.
• B)the period's net income to be understated.
• C)the period end assets to be overstated.
• D)None of these is correct.

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Definitions:

Treasury Stock

Shares that were once available for sale and have been bought back by the issuing company; these shares do not pay dividends or have voting rights.

Balance Sheet

A financial statement that showcases an organization's assets, liabilities, and shareholders' equity at a specific point in time.

Stockholders' Equity

The total value of a company's assets minus its liabilities, representing the ownership interest of its shareholders.

Asset Classification

The process of grouping a company's assets based on their nature, purpose, or the duration for which they are expected to be used in operations.