Financial statement effects for manufacturing versus service organizationsThe following fi...

Financial statement effects for manufacturing versus service organizations

The following financial statements model shows the effects of recognizing depreciation in two different circumstances. One circumstance represents recognizing depreciation on a machine used in a factory. The other circumstance recognizes depreciation on computers used in a con­sulting firm. The effects of each event have been recorded using the letter (I) to represent increase, (D) for decrease, and (NA) for no effect.

Required

a Identify the event that represents depreciation on the computers.

b Explain why recognizing depreciation on equipment used in a manufacturing company affects financial statements differently from recognizing depreciation on equipment used in a service organization.