The following information applies to the questions displayed below Gerrard Const

Question

The following information applies to the questions displayed below Gerrard Construction Co. is an excavation contractor. The following summarized date (in thousands) are taken from the December 31, 2016, financial statements: For the Year Ended December 31, 2016: Net revenues Cost of services provided Depreciation expense Operating income Interest expense Income tax expense Net income At December 31, 2016: Assets Cash and short-term investments Accounts receivable, net Property, plant, and equipment, net Total asscts $64.100 22.800 13,000 28,600 7600 6,400 14,600 $5,600 9,600 154,800 $180,000 Llabiltles and Stockholders' Equity Accounts payable Income taxes payable Notes payable (long term) Paid-in capital Retained earnings Total liabilities and stockholdlers' equity $3000 3,200 95.000 0,000 58,800 $180,000 At December 31, 2015, total assets were $164,000 and total stockholders' equity was $65,20O. There were no changes in notes payable or paid-in capital during 2016

Explanation / Answer

YES.

Explanation: Depreciation is a charge for the use of assets for the purpose of business or profession. Therefore, the depreciation expense is an indirect cost associated with the providing of the services. It shall be added in the cost of services performed for the purpose of computing the operating cost of the services provided.

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