Indicate How Each Event Affects the Horizontal Financial Statements Model

question 63

Essay

Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = IDecrease = DNot Affected = NAAn asset purchased for $24,000 with a $6,000 salvage and a 5-year life is depreciated using straight-line depreciation for two years. At the beginning of the third year the useful life of the asset is revised to 4 years with no change in salvage value. Show how the revision of depreciation expense in the third year of the asset's life will affect the financial statements in year 3 (compared to the financial statements if the revision in estimate had not been made).

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Definitions:

Interferons

Cytokines produced by animal cells when challenged by a virus; prevent viral reproduction and enable cells to resist a variety of viruses.

Capillary Permeability

The ability of blood capillary walls to allow fluid and substances to pass through them into the surrounding tissues.

Interstitial Fluid

The fluid that fills the spaces between cells, providing nutrients and removing waste from the tissue cells.

Edema

Swelling caused by excess fluid trapped in the body's tissues, often affecting the extremities.