Atkins Corporation Has Provided the Following Information for the Year

question 112

Multiple Choice

Atkins Corporation has provided the following information for the year ended December 31,2010:
The equipment account balance increased $200,000.
The equipment accumulated depreciation account increased $35,000.
Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
Depreciation expense on the equipment recorded during the year was $65,000.
Which of the following statements is correct with respect to cash flow from operating activities determination?

• A)Using the indirect method, net income is increased by the $35,000 increase in accumulated depreciation.
• B)Using the indirect method, net income is decreased by the $60,000 sales price of the equipment.
• C)Using the indirect method, net income is increased by the $65,000 depreciation expense.
• D)Using the indirect method, net income is increased by the $10,000 gain on the sale of the equipment.

Calculate the payback period for investments with both uniform and uneven cash flow patterns.

Understand the significance of the hurdle rate in capital budgeting decisions and its common benchmarks.

Recognize the importance of considering the time value of money in capital investment decisions, particularly through methods like net present value (NPV).

Identify the factors influencing the choice of depreciation method and its impact on capital budgeting and cash flow.

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Definitions:

Tennessee

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Discovery Tools

Procedures used in legal proceedings to obtain evidence from the opposing party, including depositions, interrogatories, and requests for documents.