The company’s most recent balance sheet given below. The business uses the straight-line depreciation method, by which an equal amount of depreciation is allocated to each year of a fixed asset’s estimated useful life. If the business had used accelerated depreciation for its fixed assets instead, the balance in the accumulated depreciation account would be $2,100,000. How would its balance sheet be different if the business had used accelerated depreciation? (Ignore income tax effects in your answer.)
|
Assets |
Liabilities & Owners’ Equity |
||
|
Cash |
$1,500,000 |
Accounts Payable |
$700,000 |
|
Accounts Receivable |
$1,000,000 |
Accrued Expenses Payable |
$600,000 |
|
Inventory |
$1,800,000 |
Short-term Notes Payable |
$1,500,000 |
|
Prepaid Expenses |
$300,000 |
Total Current Liabilities |
$2,800,000 |
|
Total Current Assets |
$4,600,000 |
Long-term Notes Payable |
$2,000,000 |
|
Property, Plant, & Equipment |
$4,800,000 |
Owners Equity: |
|
|
Accumulated Depreciation |
($1,400,000) |
Capital Stock (10,000 shares) |
$1,000,000 |
|
Cost Less Depreciation |
$3,400,000 |
Retained Earnings |
$2,200,000 |
|
Total Assets |
$8,000,000 |
Total Owners’ Equity |
$3,200,000 |
|
Total Liabilities & Owners’ Equity |
$8,000,000 |
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