DQ # 1
Often the Plant Assets are divided into Land and Buildings, Fixtures and Equipment, Computer Hardware and Leasehold Improvements. What does the component Leasehold Improvements consist of?
DQ # 2
Why do you think that Congress allows companies to use an accelerated method of depreciation to reduce the income tax for the current year? Will the income tax for future years increase as a result of the acceleration in the current year? Why or why not?
DQ # 3
How does a capital expenditure differ from a revenue expenditure?
Leasehold Improvements, Accelerated Depreciation, Capital Expenditure vs. Revenue Expenditure
DQ # 1 What does the component Leasehold Improvements consist of?
The Plant Asset component leasehold improvements consist of additions, alterations, remodeling, or renovations performed on a leased property. For accounting purposes, all leasehold improvements are capitalized (recorded as an asset with a corresponding liability) and amortized over the remaining life of the lease term or the life of the improvement (whichever is shorter). Upon termination of the lease, such improvements normally become the property of the owner (lessor) without any cost or obligation.
DQ # 2 Why do you ...
This solution is comprised of a detailed explanation of three questions. (1) What the component Leasehold Improvements consist of? (2) Why does Congress allows companies to use an accelerated method of depreciation? (3) How does a capital expenditure differ from a revenue expenditure?
Financial Statement Analysis: business decisions using each of the statements
1. What does the income statement tell you about the company?
2. What does the balance sheet tell you about the company?
3. What does the statement of cash flow tell you about the company?
4. What business decisions could be made using each of these financial statements?
5. What information is provided in the statements that will assist you in making these business decisions? What information is not provided that could assist in managerial decision making?