Inscrivez-vous ou connectez-vous pour rejoindre votre communauté professionnelle.
First year:
If purchased before end of the year:
Balance Sheet: Decrease in total assets because net book value will decrease
Income Statement : Decrease in net income because of depreciation
Statement of Cash Flows : Decrease for the amount paid
If purchased at the end of the year:
Balance Sheet: No impact/effect (offsetting)
Income Statement: No impact (No depreciation yet)
Statement of Cash Flows : Decrease for the amount paid
Second year
Balance Sheet: Decrease in total assets
Income Statement: Decrease in Net Income
Statement of Cash Flows : No impact
Current Year: No Depreciation for the fist year so income statement is not affected. In the Balance sheet Cash and Equipments (Fixed assets) are self adjusted by a decrease and increase. Cash flow statement: No change to cash flow from operations however decrease due to investing activities.No change in financing activities.
Second Year : Effect of Depreciation and Taxes (if any) and their reflections in three statements.
First year:
Balance Sheet: Decrease in assets (cash) and increase in assets (equipment)
Income Statement : none
Statement of Cash Flows : Decrease for the amount paid
Second year
Balance Sheet: Decrease in assets and increase in accum. depreciation
Income Statement: Decrease in Net Income (depreciation)
Statement of Cash Flows : none
VENKITARAMAN Agree With Mr
AGREE WITH MR VENKITARAMAN & MISS LESELY ANSWERS
current year increase in fixed asset & decrease in Cash
next year we will depreciate the fixed asset which will lead to increase in depreciation expenses(( report in income statement)) and accumulated depreciation (( report in liabilities in balance sheet ))
also
the fixed asset in the end of next year will be with it.s historical value
and accumulated depreciation will be subtract from it such following
fixed assets (( *** ))
subtract
accumulated derpreciation ( *** )
net fixed asset ((***))
First Year: Let’s assume that the company’s fiscal year ends Dec.31. The relevance of the purchase date is that we will assume no depreciation the first year. Income Statement: A purchase of equipment is considered a capital expenditure which does not impact earnings. Further, since we are assuming no depreciation, there is no impact to net income, thus no impact to the income statement. Cash Flow Statement: No change to net income so no change to cash flow from operations. However we’ve got a $100 increase in capex so there is a $100 use of cash in cash flow from investing activities. No change in cash flow from financing (since this is a cash purchase) so the net effect is a use of cash of $100. Balance Sheet: Cash (asset) down $100 and PP&E (asset) up $100 so no net change to the left side of the balance sheet and no change to the right side. We are balanced.
Second Year: Here let’s assume straightline depreciation over5 years and a40% tax rate. Income Statement: Just like the previous question: $20 of depreciation, which results in a $12 reduction to net income. Cash Flow Statement: Net income down $12 and depreciation up $20. No change to cash flow from investing or financing activities. Net effect is cash up $8. Balance Sheet: Cash (asset) up $8 and PP&E (asset) down $20 so left side of balance sheet doen $12. Retained earnings (shareholders’ equity) down $12 and again, we are balanced.
,,,,,,,,,,,
VENKITARAMAN Agree With Mr