Required: the Disclosure Note Indicates an Inventory Liquidation During 2010 and and 2011

question 112

Essay

Required:
The disclosure note indicates an inventory liquidation during 2010 and 2011. By how much did net income in 2010 increase due to the liquidation? Assume an income tax of 40%.

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Definitions:

Useful Life

Useful life is the estimated duration of time that an asset is expected to be functional and economically viable for its intended purpose.

Lease Term

The fixed, non-cancellable period during which a lessee has the right to use an asset, with the option for renewal under specific conditions.

Operating Lease

A contract allowing for the use of an asset without ownership, generally resulting in periodic lease payments and not recorded on the lessee's balance sheet under certain conditions.

Capital Lease

A lease agreement that is classified as a purchase by the lessee for accounting purposes, based on criteria such as ownership transfer or a bargain purchase option.