East Company incurs $110,000 of costs to establish technological feasibility of a new

Two growing firms are identical except that A Company capitalizes costs for some long-lived assets that C Company expenses.For these two firms, which of the following financial statements effects is most likely? A Company will show higher:

A.net income than C Company.

B.working capital than C Company.

C.investing cash flow than C Company.

A reconciliation of beginning and ending carrying values for long-lived tangible assets is required for firms reporting under:

A.IFRS.

B.U.S.GAAP.

C.both U.S.GAAP and IFRS.

Bao Corp.purchased a new stamping machine for $100,000, paid $100,000 for shipping, and paid $5,000 to have it installed in their plant.Based on an estimated salvage value of $25,000 and an economic life of six years, the difference between straight-line depreciation and double-declining balance depreciation in the second year of the asset’s life is closest to:

A.$7,220.

B.$10,556.

C.$16,666.

Which of the following statements about the role of depreciable lives and salvage values in the computation of depreciation expenses for financial reporting is least accurate?

A.Estimates of the useful life of the same depreciable asset can differ between companies.

B.Companies are required to disclose data about estimated salvage values in the footnotes to the financial statements.

C.Depreciable lives and salvage values are chosen by management and allow for the possibility of income manipulation.