historic cost approach, the depreciation charges will be based totally on the original value of the assets, which might also be decrease than the modern-day market value. As a result, the pronounced earnings for the duration will be greater than if the market cost strategy had been chosen. Similarly, the announcement of cash flows will be affected, as the money outflows for the buy of the assets will be decrease below the historic price approach.

historic cost approach, the depreciation charges will be based totally on the original value of the assets, which might also be decrease than the modern-day market value. As a result, the pronounced earnings for the duration will be greater than if the market cost strategy had been chosen. Similarly, the announcement of cash flows will be affected, as the money outflows for the buy of the assets will be decrease below the historic price approach.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter19: Lease Financing

Section: Chapter Questions

Problem 5MC: Now assume that the equipments residual value could be as low as 0 or as high as 400,000, but...

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