Hu Corporation
Use the following Assets section of Hu Corporation's balance sheets for the years ended December 31,2018 and 2017 to answer the questions that follow.
Hu Corporation recorded depreciation expense of $344 million for 2017.
-Refer to the information for Hu Corporation.
Required
(1)Explain the impact on net income and cash flows of Hu using straight-line depreciation for financial reporting and accelerated depreciation methods for income tax purposes.
(2)In the notes to the financial statements,Hu indicates that it uses different depreciation methods for different types of plant and equipment assets.Explain why Hu might follow this policy.
Definitions:
Cashier's Check
A check issued by a bank, drawn from the bank’s own funds and signed by a cashier or teller, guaranteed by the bank.
Payable
The amounts of money that a company owes to vendors or creditors for goods or services received that have not yet been paid.
Bearer
The individual in possession of an instrument, such as a check or promissory note, that is not made out to a specific payee.
Conditional Endorsement
An endorsement on a document or instrument subject to specific conditions or restrictions.
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