Problem

On March 12, 2008, Shoreham, Inc. acquired melting equipment for $45,600.  The estimated l...

On March 12, 2008, Shoreham, Inc. acquired melting equipment for $45,600.  The estimated life of the equipment is 6 years, with an estimated residual value of $2,400.

Throughout the current year, Calverton Company treated sales taxes paid on purchases of plant assets as revenue expenditures.  As a result, the current year’s:

a Net income is overstated.


b Revenue is overstated.


c Depreciation expense is understated.


d None of the above; payments of sales taxes should be treated as revenue expenditures.

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Solutions For Problems in Chapter 9