solve the following. show your work! Intensive Care Urology Practice (ICUP), a n

Question

solve the following. show your work! Intensive Care Urology Practice (ICUP), a not-for-profit business, had revenues in 2015 of $60,000. Expenses other than depreciation (considered as cash expenses) were 75% of revenues. Depreciation was $8,000. All revenues were collected in cash, and all expenses, excluding depreciation, were paid in cash during the year. No other assets were purchased, and no money was borrowed. A. Construct ICUP’s Income Statement. B. What was ICUP’s Cash Flow for the year? C. If (under GAAP) PU changed its depreciation method so that the Depreciation Expense doubled, what would be the new Net Income? D. Again, if (under GAAP) ICUP changed its depreciation method so that the Depreciation Expense tripled, what would be the Cash Flow? E. Comment on the results.

Explanation / Answer

A./

B./

C./

D./

NET CASH FLOW WILL BE SAME AS ABOVE $15000, BECAUSE DEPERICATION IS A NON CASH EXPENSES, SO IT HAS NO EFFECT ON CASH FLOW.

DETAILS AMOUNT SALES REVENUE $60000 EXPENSES OTHER THAN DEPRECIATION ($60000 * 75%) ($45000) DEPRECIATION ($8000) NET INCOME $7000

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