Dieker containers is suffering declining sales of its principal product, Not biodegradable plastic cartons. The president, Edward Mohling, instructs his controller Betty Fetters to lengthen asset lives to reduce depreciation expense. A processing line of automated plastic extruding equipment, purchased for $3.1 million in January 2020. was originally estimated to have a useful life of 8 years and a residual value of $300,000. Depreciation has been recorded for 2 years on that basis. Edward wants the estimated life changed to 12 years total, and the straight line method continued. Betty is hesitant to make the change, believing it is unethical to increase net income in this manner. Edward says “Hey, the life is only an estimate and Ive heard that our competition ues a 12 year life on their production equipment.
A. who are the stakeholders in this situation?
B. Is the change in asset life unethical, or is it simply a good business practice by an astute president?
C. What is the effect of Edward Mohling’s proposed change on income before taxes in the year of change?
What Students Are Saying About Us.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐
"Honestly, I was afraid to send my paper to you, but you proved you are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"
.......... Customer ID: 11***| Rating: ⭐⭐⭐⭐⭐
"This company is the best there is. They saved me so many times, I cannot even keep count. Now I recommend it to all my friends, and none of them have complained about it. The writers here are excellent."