Question: Describe all of the effects for the current fiscal year Three months after the beginning of the year, the firm purchased a building for…

Question:

Describe all of the effects for the current fiscal year

Three months after the beginning of the year, the firm purchased a building for $600 in

cash. The building is going to be the new corporate headquarters. The building has an

estimated useful life of 10 years, and a salvage value of zero. The firm uses the straight-line

method for depreciation.

balance sheet: PP&E 555 depreciation expense 45 accumulated depreciation 45 

income statement:

retained earnings portion of the statement of shareholders’ equity: NI down 555

CF statement: CF investing activities down 600 CF operating activities depreciation up 45

Five months after the beginning of the year, the firm, which is an insurance company,

collected $120 from its customers for one year worth of insurance premiums. Coverage is

effective immediately.

balance sheet: cash up 120 

income statement: revenue up 120 

retained earnings portion of the statement of shareholders’ equity: NI up 120 

CF statement: operating CF up 120