9:08 PM edugen.wileyplus.com Business Communication-Term Project Topics 75% , +
ID: 2471698 • Letter: 9
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9:08 PM edugen.wileyplus.com Business Communication-Term Project Topics 75% , + RUNNING HEAD IN 50 c WileyPLUS Kimmel, Accounting, 4e Helo I S CALCULATOR PRINTER VERSION BACK NEXT Exercise 9-17 Elmbrook Corporation reported net income of $56,860. Depreciation expense for the year was $147,980. The company calculates depreciation expense using the straightline method, with a useful life of 10 years. Top management would like to switch to a 15-year useful life because depreciation expense would be reduced to $91,210. The CEO says, "Increasing the useful life would increase net income and net cash provided by operating activities." (a) Provide a comparative analysis showing net income and net cash provided by operating activities (ignoring other accrual adjustments) using a 10-year and a 15-year useful life. (Ignore income taxes.) Net Income Net cash provided by operating activities Show Work is REQUIRED for this questions Qeen Show Work K TO TEXT Attempts: 0 of 5 used SAVE FOR LATER SUBMIT ANSWER Copyright © 2000-2016 by John Wiley & Sons, Inc. or related companies. All rights reservedExplanation / Answer
10 year
Net Income $56,860 (given)
56,860 + 147,980 = $204,840 Income before depreciation and also net cash from operating activities
15 year
204,840 - 91,210 = $113,630net income
113,630+ 91,210 = $204,840 income before depreciation and also net cash flow from operating activities
Although reducing depreciation expense would increase net income, depreciation is a noncash expense. So it has no real effect on cash flows
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