Question

Currently Ace is charged $4,060,000 Depreciation on the Income Statement of Andrews. Andrews is planning for an increase in this depreciation. On the financial statements of Andrews will this?

Answer 1

The $4,060,000 should be added to the net income under the operating activity.

Step-by-step explanation:

Depreciation: It is the amount which shows a reduction in the value of the fixed assets due to tear and wear, obsolesce, usage, etc.

Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments also.

Moreover, the depreciation amount should be added to the net income amount because depreciation is a non - cash expense.

So, $4,060,000 should be added to the net income under the operating activity.