Dwayne saw the following information in an accounting

Dwayne saw the following information in an accounting report:,,Motor Vehicle $40,000 ,Less Accumulated Depreciation Motor Vehicle 12,000, ,He believes that this means that if it was sold on that day, the vehicle should have achieved a price of about $28,000.,,Is Dwayne correct? Justify your answer by explaining what is meant by the term depreciation, the role and process of recognising depreciation in accounting reports, and by identifying the accounting concepts that provide the justification for recognising depreciation.,

Mystical Corporation found the following errors in their year-end

Mystical Corporation found the following errors in their year-end financial statements:, As of Dec. 2012 As of Dec. 2013, Ending Inventory $32,000 understated $46,000 overstated, Depreciation Exp. $7,000 understated ,On December 31, 2013, a fully depreciated machine was sold for $35,000 but the sale was not recorded until January 15, 2014 when the cash was received. In 2012, a three-year insurance premium was prepaid for $45,000 of which the entire amount was expensed in the first year. ,There were no other errors or corrections. Ignore any tax considerations. ,What is the total net effect of errors on Mystical’s 2013 net income? (Points : 5) , Working capital overstated by $31,000, Working capital overstated by $11,000, Working capital understated by $4,000, Working capital understated by $36,000,

As of January 1, 2011, Survival Industries, Inc. purchased a boat

As of January 1, 2011, Survival Industries, Inc. purchased a boat at a cost of $360,000. ,When purchased, the company was using the double-declining depreciation method. ,Key info on the asset at time of purchase is the following. , Estimated useful life is 6 years., Residual Value is $0.,At the beginning of 2014, the CFO decided to change to straight-line depreciation method. ,Compute the depreciation expense for 2014. (Points : 5) , $35,556, $10,667, $60,000, $120,000,

On December 31, 2013, Gifts Galore, Inc. appropriately changed

On December 31, 2013, Gifts Galore, Inc. appropriately changed its inventory valuation method from weighted-average cost to FIFO method for financial statement and income tax purposes. The change will result in a $1,800,000 increase in the beginning inventory at January 1, 2013. Assume a 40% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is (Points : 5) , $0., $1,800,000., $1,080,000., $720,000.,