Balance Sheet Cash Flow Assets Income Statement Statement Cash + Stone ReservesL

Question

Balance Sheet Cash Flow Assets Income Statement Statement Cash + Stone ReservesLiab. NA Equity 2,000,0000 Rev. - Exp. Net Inc. NA 2,000,000 NA 2,000,000 (2,000,000) NA Balance Sheet Cash Flow Assets Income Statement Statement Cash Stone ReservesLiab. NA Equity 2,000,0000 Exp. Net Inc. NA 2,000,000 NA 2,000,000 (2,000,000) (2,000,000) OA Balance Sheet Cash Flow Statement Assets Income Statement Cash +Stone ReservesLiab. NA Equity 2,000,0000 Rev. - NA Exp. NA Net Inc. NA 2,000,000 NA NA Balance Sheet Cash Flow Statement Assets Income Statement Cash + Stone Reserves Liab. + Equity NA (2,000,000 Rev. -Exp Net Inc. NA NA (2,000,0000) NA NA (2,000,000) OA

Explanation / Answer

CALCULATION OF THE DEPRECIATION EXPENSES PER MILES UNDER UNITS OF PRODUCTION Purchase Cost of Mining $            1,05,00,000 Less: Salvage Value $                  5,00,000 Net Value for Amortization $            1,00,00,000 Expected to extract raw material $                      50,000 Tons Amortization per Tonsa $                            200 Per Ton ($ 10,000,000 / 50,000 Tons) First year amortization amount = 10,000 Tons X $ 200 = $                20,00,000 This is the amortization expenses which are charged to revenue expenses and there is no cash outflow This transaction can affect the all area of financial statement, details are explained below. Balance Sheet total Assets = Purchase cost of Mines = $            1,05,00,000 Less: Amortization value $              -20,00,000 Net value of the Mines $                85,00,000 Income statement Revenue $                               -   Expenses $                20,00,000 Net Revenue $              -20,00,000 Cash Flow Statement Decrease in opearting Assets = $              -20,00,000 So, As per the above Explanation Answer is as below, Answer = Option 2 Assets            = Incomse Statement Cash Flow statement Cash + Stone Reserve         =      Liability + Equity Rev       - Expenses = Net Income   NA     +   (2000,000)              = NA       + (2000,000) NA           - 2,000,000 = (200,000) (2000,000) OA

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