Indicate How Each Event Affects the Financial Statements

question 147

Essay

Indicate how each event affects the financial statements. 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 dollar amounts.Increase = I Decrease = D Not Affected = NAAn asset purchased for $24,000 with a $6,000 salvage value and a 5-year life has been depreciated using the straight-line method for two years. At the beginning of Year 3, the useful life of the asset was 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:

Generic

A characteristic or product that is not branded or trademarked, often considered universal or standard.

Specific Manufacturer

A particular company that produces goods or products within a defined domain of expertise.

Blood-Brain Barrier

A semipermeable barrier of endothelial cells that prevents certain substances in the blood from reaching the brain, while allowing others to pass.

Central Nervous System

The central nervous system is the part of the nervous system consisting of the brain and spinal cord, which is responsible for processing and sending out signals to the body.