Writing Assignment Impact of historical cost on asset presentation on the balance sheet
Assume that you are examining the balance sheets of two companies and note the following information.
| Company A | Company B |
Equipment | $1,130,000 | $900,000 |
Accumulated Depreciation | (730,000) | (500,000) |
Book Value | $ 400,000 | $400,000 |
Maxie Smith, a student who has had no accounting courses, remarks that Company A and Company B have the same amount of equipment.
Required
In a short paragraph, explain to Maxie that the two companies do not have equal amounts of equipment. You may want to include in your discussion comments regarding the possible age of each company’s equipment, the impact of the historical cost concept on balance sheet information, and the impact of different depreciation methods on book value.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.