During 2011,Lele Design Earned Net Income of $250,000

question 11

Essay

During 2011,Lele Design earned net income of $250,000.The firm neither bought nor sold any capital assets.The book value of its assets declined by the year's depreciation charge of $200,000.The firm's operating cash flow for the year was $450,000.The market value of its assets increased by $300,000.What was Lele Design's economic income for the year?
Why is this figure different from its accounting income?
Please ignore taxes for this problem.

---

Definitions:

Fitted Values

Estimates or predictions generated by a statistical model that represent the best guesses for the dependent variable based on the model and the input values.

Constant Variance

The condition in which the variance of the error terms in a regression model is the same across all levels of the independent variable.

Correlation Coefficient

A numerical index that determines both the magnitude and orientation of a linear correlation between two variables, which can vary between -1 and 1.

Variables

Elements, features, or factors that are likely to vary or change among subjects in a study or a population.