The effects on a firm’s financial statement in the initial year when cost of an asset i

An analyst has gathered the following information from the current year fixed asset disclosures of three competing companies:

Based on this information, which company is depreciating its building over the longest average period?

A.Company X.

B.Company Y.

C.Company Z.

Which of the following would most likely be lower in the early years of an asset’s life using accelerated depreciation methods rather than straight-line depreciation?

A.Investing cash flow

B.Shareholder’s equity

C.Cash flow from operations

A company records an asset retirement obligation (ARO) because of environmental damage.Which of the following will most likely result from the recording an ARO in any given year?

A.An increase in return on equity and an increase in depreciation expense

B.An decrease in return on equity and an increase in depreciation expense

C.An decrease in return on equity and an decrease in depreciation expense

An analyst gathers the following information ($ millions) about three companies operating in the same industry:

Although the companies have different levels of sales and assets, they are all experiencing sales growth at about the same rate and use the same type of equipment in the manufacturing process.All three companies also use the same depreciation method.Which company is least likely to require major capital expenditures in the near future? Company:

A.1.

B.2.

C.3.