Question

consider the income statement you prepared on page 57 of your textbook if the depreciation expense on equipment is calculated at 25% rather than 30% .what is the net income note at each stage in your calculations round up to the nearest whole dollar a 36563 b 37245 c 38245 d 38675​

Answer 1

To adjust the net income based on a change in depreciation from 30% to 25%, calculate the new depreciation expense and add the difference to the original net income before depreciation. Then round up to the nearest whole dollar.

Step-by-step explanation:

The question relates to adjusting the depreciation rate on an income statement to see its effect on net income. If the depreciation expense on equipment is recalculated from 30% to 25%, the net income will change accordingly. Depreciation is a non-cash expense that reduces pre-tax income, so a lower depreciation rate will increase net income.

Let's assume the original income statement with a 30% depreciation rate resulted in a net income before calculating depreciation to be $X. If the depreciation calculated at 30% was $Y, reducing it to 25% would make it 25/30 of $Y, or approximately 0.8333*Y. Hence, the new net income would be the original net income plus the difference in depreciation (0.1667*Y).

For a more precise calculation, you'd need the exact figures for the original net income before depreciation (X) and the depreciation amount at 30% (Y). The calculations are as follows:

1. Calculate 25% depreciation: 25% of Y.
2. Subtract the result from the original net income before depreciation (X) to get the new net income.
3. Round up to the nearest whole dollar as per the instruction.