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).

---

Definitions:

Nobel Prize

A set of international awards given annually in several categories such as Physics, Chemistry, Medicine, Literature, and Peace, to individuals or organizations who have made significant contributions to humanity.

Wavelength

The distance between successive crests of a wave, especially points in a sound wave or electromagnetic wave, which is related to the wave's frequency and energy.

Hue

A dimension of color that is determined by the wavelength of light; the term is often used to refer to the name of the color such as red, blue, or yellow.

Amplitude

The measure of the loudness of a sound; expressed in the unit called the decibel.