As Part of Its Environmental Cost Reporting System, Jesse Company

question 78

Multiple Choice

As part of its environmental cost reporting system, Jesse Company tracks its total environmental costs. Consider the cost and sales data given:
$\begin{array}{rrrr}\text { Year}&\text { Total Environmental Costs }&\text { Sales Revenue }&\text { Operating Costs }\\\hline20 X 1 & \$ 7,500,000 & \$ 62,500,000 & \$ 50,000,000 \\20 X 2 & 6,250,000 & 62,500,000 & \$ 50,000,000 \\20 X 3 & 5,500,000 & 68,750,000 & \$ 50,000,000 \\20 X 4 & 4.812 .500 & 68.750,000 & \$ 50,000,000\end{array}$
-Refer to the figure.What are the environmental costs as a percentage of sales for 20X4?

• A)7%
• B)14.29%
• C)72.73%
• D)142%

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Straight-Line Method

A depreciation technique that allocates an equal portion of an asset's cost to each year of its useful life.

Measurement Differences

Discrepancies that arise when comparing or converting financial information due to differing methodologies, assumptions, or standards.

IFRS

A collection of accounting norms established by the International Accounting Standards Board (IASB) known as International Financial Reporting Standards, which direct the global preparation of financial statements.