Solo Company Has Been Depreciating Its Fixed Assets Over 15

question 47

Multiple Choice

Solo Company has been depreciating its fixed assets over 15 years. It is now clear that these assets will only last a total of 10 years. Solo's accountants have encouraged the firm to revise its annual depreciation to reflect this new information. Which of the following would occur as a result of this change?

• A) The company's earnings per share would decrease.
• B) The company's cash position would increase.
• C) The company's EBIT would increase.
• D) Both a and b are correct.
• E) All of the answers above are correct.

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Definitions:

Maintenance Records

Documentation of all the repairs, upkeep, and inspections carried out on equipment or property to ensure it remains in good working condition.

Common-value Auction

A bidding process where the item's true value is identical across all participants, though individual bidder estimates of this value may vary.

Exact Value

The precise numerical amount or measurement of an item, without approximation or rounding.

Bidders

individuals or entities that offer a price for goods, services, or assets in auctions or competitive bidding scenarios.