In 2019, A.M.E. Corporation's accountant incorrectly expensed the cost of a major repairs to one of its equipment. The repairs would prolong the life of the asset beyond its current estimated useful life. Which of the following is (are) true? Question 18 options: Income in 2019 is understated. Income in future years is overstated. Corporation's assets in 2019 will be understated. All of these answer choices are true
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
In 2019, A.M.E. Corporation's accountant incorrectly expensed the cost of a major repairs to one of its equipment. The repairs would prolong the life of the asset beyond its current estimated useful life. Which of the following is (are) true?
Question 18 options:
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Income in 2019 is understated. |
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Income in future years is overstated. |
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Corporation's assets in 2019 will be understated. |
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All of these answer choices are true |
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