Financial Accounting
Financial Accounting
17th Edition
ISBN: 9781259692390
Author: Jan Williams, Susan Haka, Mark S Bettner, Joseph V Carcello
Publisher: McGraw-Hill Education
Question
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Chapter 9, Problem 1STQ
To determine

Find the situation from below that the named company not record any depreciation expense on the assets described.

Expert Solution & Answer
Check Mark

Answer to Problem 1STQ

c) Computer Sales Company has in inventory a new type of computer, designed “never to become obsolete.”

Explanation of Solution

  1. a. Commuter Airline is required by law to maintain its aircraft in “as good as new” condition. Commuter Airline records depreciation expense on its aircrafts. Hence, it is not the correct answer.
  2. b. Metro Advertising owns an office building that has been increasing in value each year since it was purchased. It records the depreciation expense on building. Hence, it is not the correct answer.
  3. c. Computer Sales Company has in inventory a new type of computer, designed “never to become obsolete.” This company does not record any depreciation expense on new type of computer because for this company new type of computer is an inventory.  Depreciation is not recorded on the inventory. Hence, it is the correct answer.
  4. d. Option c is the correct answer. Thus, the option (d) none of the above is incorrect answer.

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