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28 December, 18:34

In its 2017 annual report, Allen Company reports the following (in thousands) : 2017 2016 Total revenue $102,500 $99,400 Property, plant, equipment, gross 41,300 38,700 Property, plant, equipment, net 16,540 14,905 Depreciation expense 1,935 1,655 If revenue growth is projected to be 5%, the 2018 forecasted depreciation expense to be added back on the statement of cash flows is:

A. $1,935 thousand

B. $2,147 thousand

C. $1,766 thousand

D. $2,065 thousand

E. None of the above

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Answers (1)
  1. 28 December, 20:15
    0
    2018 forecasted depreciation expense = 2065 thousand

    so correct option is D. $2,065 thousand

    Explanation:

    given data

    2017 2016

    Total revenue $102,500 $99,400

    gross 41,300 38,700

    net 16,540 14,905

    Depreciation expense 1,935 1,655

    revenue growth = 5 %

    to find out

    2018 forecasted depreciation expense

    solution

    we know here Depreciation expense for 2017 is = 1935

    and Divide by Property, plant, equipment, gross 2016 is = 38700

    and Depreciation rate for 2017 = 5.00%

    Property, plant, equipment, gross 2017 = 41300

    Depreciation rate = 5.00%

    so for 2018 forecasted depreciation expense is

    2018 forecasted depreciation expense = gross 2017 * Depreciation rate ... 1

    2018 forecasted depreciation expense = 41300 * 5%

    2018 forecasted depreciation expense = 2065 thousand

    so correct option is D. $2,065 thousand
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